Hydro, a leading aluminium and renewable energy company, has voluntarily agreed to terminate a long-term power purchase agreement (PPA) with Cloud Snurran AB and is deemed to receive a settlement compensation amounting to nearly EUR 90 million (USD 98.1 million). The amount for compensation is dependent on the realised values from the future sales process as well as the agreed value sharing mechanism.
Initially, the PPA between Hydro Energy AS and Cloud Snurran AB could be traced back to 2018, which was initiated for an annual baseload supply of 300 GWh for a decade starting from 2020 to 2030. Additionally, a 500 GWh annual baseload supply was agreed for the period between 2031 and 2049.
Why the sudden revocation of the agreement? Cloud Snurran AB came into a major financial struggle and has been in this situation for the past few years now, failing to provide the decided volumes to Hydro, as per the PPA from November 2024.
Cloud Snurran AB applied to the Svea Court of Appeal for reorganisation under the Swedish Restructuring Act, which was approved on July 17, 2024, overturning an earlier decision made by the Stockholm District Court.
Cloud Snurran AB, back in 2021, proposed for reorganisation, which Stockholm District Court on June 7, 2021, adopted a compulsory composition agreement with a 75 per cent write down of the company's subordinated debts and decided to end the ongoing company reorganisation proceedings.
Hydro's agreement to voluntarily terminate the PPA is as part of the final settlement with a compensation of up to EUR 90 million (USD 98.1 million) for the non-delivered volumes and the future power deliveries.
Hydro's Norwegian smelters are well-positioned in terms of power sourcing through 2030, supported by an average annual equity hydropower output of 9.4 TWh and a contract portfolio of approximately 8.5 TWh per year.
With several long-term power agreements set to expire by the end of 2030, Hydro is proactively exploring a broad range of sourcing opportunities to ensure continued access to cost-competitive renewable energy for its operations.
Provided that specific conditions are fulfilled, the settlement is expected to take effect in July 2025.
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