Spanish renewable energy group Greenalia SA (BME:GRN) said that it has signed a preliminary agreement to supply up to 2,297 GWh/year of wind power to the San Ciprian smelter operated by US aluminium producer Alcoa Corp (NYSE:AA) in northwestern Spain.
Alcoa has been struggling to keep its aluminium smelter competitive and afloat due to exorbitant electricity prices in Spain, and has been embroiled in a bitter labour dispute over its decision to curtail the plant and conduct a mass layoff.
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In a bourse filing on Sunday, Greenalia said it signed a document, a kind of prelude to a power purchase agreement (PPA), committing to offer the output from its wind farm projects it is developing in the Spanish region of Galicia. To serve the customer, the company has selected up to 18 projects totalling some 895 MW, sited mainly in Lugo province where Alcoa’s smelter is located.
The proposed PPA would run for at least ten years starting from January 1, 2024, Greenalia said.
The selected projects have grid access and connection rights in place, and are currently undergoing permitting.
The preliminary agreement is part of Alcoa’s proposal to reactivate the facility in 2024, and the proposed wind PPA is seen as one way to ensure its competitiveness, Greenalia added.
Last week, Alcoa presented its final offer to the striking workers at the San Ciprian smelter, extending them new labour benefits and a plan to halt the electrolysis process for two years while it works to secure a PPA and make investments in the facility.
Greenalia says it has 3,272 MW of renewable energy projects in advanced stages of the permitting process in Spain. Of them, wind projects in Lugo province account for 584 MW and can hook to a substation located next to Alcoa’s facilities. Construction of some of the projects could start by the end of 2023, according to the company.