May 10 (Renewables Now) - Canada’s Brookfield Asset Management Inc (TSE: BAM.A) will develop and build solar and wind plants to supply green power to a large chemicals production site that German major BASF SE (ETR:BAS) is building in the Chinese coastal city of Zhanjiang.

The two companies said on Tuesday they have signed a term sheet for a 25-year power purchase agreement (PPA) with a fixed cost mechanism. The pricing of the green power projects that will be developed is based on the levelised cost of energy concept.

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Apart from renewable energy plants, the deal includes also an option for energy storage solutions.

“BASF is dedicated to building its Zhanjiang Verbund site into a role model of sustainable production, and aims to already achieve 100% renewable electricity supply for its Zhanjiang Verbund site by 2025. This is part of BASF's climate neutrality target, and will also contribute to China's carbon reduction goal,” said Haryono Lim, Senior Vice President, New Verbund Site China.

The Zhanjiang Verbund site, worth an investment of between USD 8 billion and USD 10 billion (EUR 9.47bn), will be BASF's third-largest production site after the factories in Ludwigshafen, Germany, and Antwerp, Belgium. The Ludwigshafen-based chemicals producer plans to complete the whole Verbund site by the end of the decade.

(USD 1 = EUR 0.947)