Avangrid and Statkraft Sign Second Virtual Power Purchase Agreement (VPPA) In the Past Nine Months

Rhea-AI Summary

Avangrid (NYSE: AGR) and Statkraft have signed a short-term Virtual Power Purchase Agreement (VPPA) for energy from Avangrid's 35 MW Casselman wind farm in Pennsylvania. This is their second VPPA in nine months, following a deal for Avangrid's 300 MW Streator Cayuga Ridge South wind farm in Illinois. The Casselman wind project, operational since 2007, consists of 23 wind turbines located near Meyersdale and Rockwood, about 60 miles southeast of Pittsburgh.

Avangrid CEO Pedro Azagra highlighted the deal as evidence of market interest in their productive merchant assets and their commitment to accelerating the clean energy transition. Patrick Pfeiffer, Managing Director of Statkraft's U.S. operations, emphasized the importance of power purchase agreements in driving the green transition forward.

Positive

• Second VPPA signed between Avangrid and Statkraft in nine months, indicating a strengthening partnership
• Demonstrates market interest in Avangrid's merchant assets
• Aligns with Avangrid's sustainability goals and commitment to clean energy transition
• Provides long-term certainty for Avangrid in a competitive market

Negative

• None.

Financial Analyst

This VPPA deal between Avangrid and Statkraft, while positive, has a immediate financial impact. The agreement covers a relatively small 35 MW wind farm, representing only a fraction of Avangrid's $41 billion in assets. However, it's part of a strategic pattern of risk management and portfolio optimization. The short-term nature of the VPPA suggests Avangrid is capitalizing on current market conditions while maintaining flexibility. For investors, this demonstrates Avangrid's proactive approach to maximizing value from existing assets, which could contribute to steady cash flows. The deal also strengthens Avangrid's relationship with a major European player, potentially opening doors for future collaborations. While not a game-changer, it's a positive step in Avangrid's broader strategy to navigate the evolving energy market landscape.

Renewable Energy Expert

This VPPA signifies a growing trend in the renewable energy sector. Short-term agreements are becoming more common as they offer flexibility in a rapidly changing market. The Casselman wind farm's location on a rehabilitated surface mine showcases the industry's ability to repurpose land, addressing environmental concerns while generating clean energy. With 23 turbines producing 35 MW, the farm's capacity factor appears to be around 30%, which is reasonable for an older wind project. The repeated deals between Avangrid and Statkraft indicate a maturing market for merchant renewable assets. This trend could lead to more efficient pricing and risk allocation in the sector, potentially accelerating the clean energy transition by making projects more financially viable and attractive to investors.

Market Research Analyst

The repeated VPPAs between Avangrid and Statkraft highlight an evolving dynamic in the U.S. energy market. European players are increasingly seeking opportunities in the U.S. renewable sector, driven by favorable policies and market growth. This trend could lead to increased competition and innovation. The focus on short-term agreements suggests a shift in risk perception and market strategies. Companies are adapting to rapidly changing market conditions, preferring flexibility over long-term commitments. For Avangrid, this approach helps manage merchant risk in its portfolio while potentially capturing upside in a volatile market. The deal also underscores the growing importance of corporate PPAs in driving renewable energy adoption, a trend likely to continue as more companies commit to sustainability goals.

Statkraft to purchase energy from Avangrid’s 35 MW Casselman wind farm in Somerset County, Pennsylvania

SOMERSET COUNTY, Pa.--(BUSINESS WIRE)-- Avangrid, Inc. (NYSE: AGR), a leading sustainable energy company and member of the Iberdrola Group, and Statkraft, Europe’s largest producer of renewable energy, today announced the signing of a short-term Virtual Power Purchase Agreement (VPPA) for energy from Avangrid’s 35 MW Casselman wind farm in Pennsylvania. This marks the second such deal between the two companies within the past nine months as they strengthen their growing relationship in the United States.

Earlier this year, Avangrid and Statkraft announced a short-term VPPA for Avangrid’s 300 MW Streator Cayuga Ridge South wind farm in Illinois. Statkraft and Iberdrola, S.A., Avangrid’s parent company, have a Power Purchase Agreement (PPA) in place for energy produced at Iberdrola’s Korytnica II wind farm in Poland.

“We are happy to continue building our U.S. relationship with Statkraft, a clean energy leader that aligns with our sustainability goals at Avangrid,” said Pedro Azagra, Avangrid CEO. “This is further proof of an interested market for our productive merchant assets as we manage risk within our existing portfolio of projects. Additionally, partners like Statkraft are key to executing on our commitment to accelerating the clean energy transition.”

”Power purchase agreements are a key driver in moving the green transition forward”, said Patrick Pfeiffer, Managing Director of Statkraft's operations in the United States. “As the demand for clean energy grows in the US, so does the need for providers like Statkraft: We are proud to support our partner Avangrid with long-term certainty, needed to thrive in a competitive market.”

The Casselman wind project reached commercial operation in 2007 and is located about 60 miles southeast of Pittsburgh, near the towns of Meyersdale and Rockwood. The plant’s 23 wind turbines, with a combined capacity of 35 MW, are located on top of and near a rehabilitated surface mine, and bring clean energy jobs to the region.

About Avangrid: Avangrid, Inc. (NYSE: AGR) aspires to be the leading sustainable energy company in the United States. Headquartered in Orange, CT with approximately $46 billion in assets and operations in 24 U.S. states, Avangrid has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 8,000 people and has been recognized by JUST Capital as one of the JUST 100 companies – a ranking of America’s best corporate citizens – in 2024 for the fourth consecutive year. In 2024, Avangrid ranked first among utilities and 12 overall. The company supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2024 for the sixth consecutive year by the Ethisphere Institute. Avangrid is a member of the group of companies controlled by Iberdrola, S.A. For more information, visit www.avangrid.com.

About Statkraft US: Statkraft, Norway's state-owned renewable energy company, has been operating in the US renewable energy commodity markets since 2015. The company is an active participant in the US carbon, renewable energy and PPA markets, transacting with both renewable energy producers and consumers. From its two offices (Stamford, CT and San Francisco, CA), the local team is also responsible for representing the company's global portfolio to US clients and driving strategic business development in the US.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240815317991/en/

Keaton Thomas

Keaton.thomas@avangrid.com

503-956-9621

Maike Hohlbaum

Maike.hohlbaum@statkraft.com

+49-151-275-46308

Source: AVANGRID, Inc.

FAQ

What is the capacity of Avangrid's Casselman wind farm in Pennsylvania?

Avangrid's Casselman wind farm in Pennsylvania has a capacity of 35 MW.

When did the Casselman wind project (AGR) begin commercial operation?

The Casselman wind project reached commercial operation in 2007.

How many wind turbines are in the Casselman wind project (AGR)?

The Casselman wind project consists of 23 wind turbines.

What was the previous VPPA between Avangrid (AGR) and Statkraft?

The previous VPPA was for Avangrid's 300 MW Streator Cayuga Ridge South wind farm in Illinois.