Hydro signs 10 GWh hybrid power deal with Varberg Energi to stabilise renewable electricity supply

Image obtained via official press release (credit: Varberg Energi)

Norsk Hydro’s energy arm Hydro Energi AS has signed an 18-month hybrid power purchase agreement (PPA) with Varberg Energi, combining wind power, solar power and energy storage to deliver a more stable renewable electricity supply for industrial consumption.

The agreement covers 10 GWh of electricity in Sweden’s SE3 bidding zone, with deliveries already underway from July 2026. The pilot is designed to test how different renewable energy sources and storage technologies can be combined to address the intermittency of renewable power while maintaining a competitive and sustainable electricity supply for industry.

Hydro tests hybrid renewable power supply model

Under the pilot agreement, Varberg Energi will supply Norsk Hydro with electricity generated from its own wind and solar assets, supported by energy storage capacity. The combination is intended to create a more balanced power delivery profile than relying on intermittent renewable sources individually.

For energy-intensive industries such as aluminium, where reliable and competitively priced electricity is a critical production input, managing fluctuations in renewable generation is becoming increasingly important.

Hydro said the hybrid PPA is intended to reduce variability and provide a more stable supply of renewable electricity for industrial consumption. The companies will also exchange knowledge and operational data during the pilot, focusing on how different energy resources and technologies can be combined and optimised to meet industrial power requirements.

Join the webinar by Alberto Monje Gama to learn about recycled aluminium, CBAM and trust

10 GWh of electricity secured over 18 months

The 10 GWh hybrid power contract will run for 18 months, with deliveries beginning in July 2026. The agreement is positioned as a proof of concept rather than simply a conventional renewable electricity purchase.

The broader objective is to determine whether a combination of wind energy, solar power and battery/energy storage can provide a more predictable renewable power profile for industrial users.

If the model proves successful, Hydro and Varberg Energi see potential for similar hybrid renewable energy solutions to be deployed more widely across the electricity market.

Why hybrid PPAs matter for aluminium

Traditional renewable power purchase agreements can expose buyers to the variability of individual generation sources. A hybrid PPA, by contrast, can combine complementary generation profiles and storage to help smooth supply.

The pilot adds another dimension to Hydro’s strategy of developing renewable energy solutions alongside its aluminium business. The company operates across aluminium and renewable energy and has been pursuing solutions aimed at supporting the transition towards lower-carbon aluminium production.

The Varberg Energi agreement therefore goes beyond securing 10 GWh of renewable electricity. It provides Hydro with an opportunity to assess whether hybrid renewable power supply can become a scalable model for energy-intensive industries seeking reliable, sustainable and competitive electricity.

To explore trade opportunities of secondary aluminium, visit AL Biz