Another PPA off the table; what’s next for Hydro’s wind ambition?
Norwegian aluminium and energy giant, Hydro, has revealed that it anticipates receiving compensation of NOK 251 million (EUR 21.6 million or USD 25.0 million) after ending a power purchase agreement (PPA) with one of Sweden’s largest wind farms. This compensation arises from the cancellation of a long-term renewable energy contract, highlighting the financial adjustments tied to the firm’s shifting power procurement strategy in the Nordic energy market.
In its third-quarter 2025 report, the company has announced that it has recognised the anticipated compensation related to the Överturingen wind farm located in northern Sweden. Chief Financial Officer Trond Olaf Christophersen shared that this payment is associated with the project owned by Cloud Snurran AB, which just managed to steer clear of bankruptcy last year.
Trond Olaf Christophersen, CEO of Hydro, stated, “The wind farm went through a restructuring process, and as part of that process, we accepted to cancel our power purchasing agreement, but we will get the compensation when the wind park is sold.”
Back in July 2025, the firm stands to gain compensation of up to EUR 90 million (around USD 98.1 million), which will cover both undelivered power volumes and future power delivery rights. This decision comes in light of Cloud Snurran AB's financial struggles, which raised concerns about the project's ability to meet its contractual commitments. The Norwegian company emphasised that this move is in line with its overall energy procurement and risk management strategy, helping to ensure stability in its renewable energy sourcing efforts.
A reflection on the Q3 report
The firm mentioned that the NOK 251 million (USD 25.1 million) noted in its third-quarter 2025 report is an accounting estimate shaped by various uncertain factors, with the final compensation amount depending on the upcoming sale of the Överturingen wind farm.
This project was initially set up to deliver 300 GWh each year from 2020 to 2030 and 550 GWh from 2031 to 2049, but it fell short of its delivery commitments after just four years of operation. The cancellation of the Överturingen contract is the second long-term PPA Hydro has scrapped in northern Sweden recently, both involving wind projects owned by Chinese companies.
Is this similar to 2024?
In 2024, the firm struck a settlement agreement with Markbygden 1, which is Sweden’s largest wind farm, after the project underwent a financial restructuring. This deal allowed the firm to receive up to EUR 248 million (USD 266 million) in compensation for ending a long-term PPA that was meant to deliver 1.65 TWh of wind power each year for 19 years. However, the actual compensation hinges on the future sale of the wind farm, which has not happened yet.
The Markbygden 1 project was mainly owned by China’s state-owned nuclear power company CGN, which lost its stake during the reorganisation after lenders took over shares that were used as collateral for a SEK 5 billion loan, as reported by Dagens Industri. Now, the asset is owned by Stichting North Pole Holding, a Dutch foundation.
In a similar vein, Cloud Snurran AB, associated with the Överturingen wind farm, also has Chinese connections in its ownership structure and is held by Finnish investment firm CapMan and Scotland-based Red Rock Power, the latter being a subsidiary of China’s SDIC Power Holdings.
The persisting challenge
At present, the company is ramping up its renewable energy strategy in the Nordics, even in the face of some recent setbacks, like the cancellation of two PPAs in northern Sweden. CFO Pål Kildemo Christophersen explained that these agreements ran into operational issues when it came to meeting high base load commitments, which forced suppliers to turn to the open market for more expensive power.
He further pointed out that this situation has highlighted just how crucial it is to have well-structured contracts in the wind sector, especially when it comes to base load obligations. The wider Scandinavian wind market is also feeling the pressure, with lower-than-expected demand, falling power prices and significant price differences between regional zones affecting developers' financial health.
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Despite this, the company firmly believes that wind power is the most competitive energy source for the Nordics, stressing its vital role in tackling potential future power shortages. To back this up, the firm's joint venture Rein picked up an 80 per cent stake in 2.4 GW of wind power projects in Sweden and Norway last year and teamed up with Pajala Almänning to look into adding up to 50 turbines in northern Sweden.
With active participation in over 30 projects across Sweden's four price zones, the firm is steadily growing its renewable presence. After selling a 49.9 per cent stake in Rein to Macquarie Asset Management, which valued the company at USD 333 million, the company assures that its renewable energy supplies for its Norwegian aluminium operations are secure through 2030, while it continues to seek out competitive long-term power contracts for the future.
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