Covestro signs first major renewable energy agreement for its US operations

05 June 2023

Covestro, a leading manufacturer of high-quality polymer materials and their components, has signed a 90 megawatt (MW) virtual power purchase agreement (vPPA) with Ørsted, a clean energy leader in the US market, headquartered in Denmark.

With various agreements in place, Covestro fosters the growth of renewable energy projects around the world. This newest 15-year agreement secures a portion of power from the Mockingbird Solar Center in Lamar County, Texas, marking Covestro’s first renewable energy agreement in the US. The vPPA is estimated to offset 70,000t/yr of CO2 emissions and will reduce the scope 2 emissions from Covestro’s third largest production site, located in Baytown, Texas.

“This important new announcement builds upon Covestro’s  existing agreementwith Ørsted and clearly signals our commitment to the use of renewable energy,” said Markus Steilemann, CEO of Covestro. “The inclusion of renewable energy to help power our facilities is a critical component to reducing our scope 2 emissions and becoming operationally climate neutral by 2035.”

Covestro set itself ambitious climate neutrality goals in 2022. One major lever to reach these goals is energy from renewable sources, such as wind and solar power.

“The vPPA with Ørsted comes on the heels of our recent announcement of ISCC PLUS certification for our production site in Baytown, Texas,” explains Haakan Jonsson, Chairman and President of Covestro LLC. “These two initiatives represent our focus on sustainability and the strategic path we have set to minimise our carbon footprint across Covestro’s operations in the United States. Cumulatively, projects like this help us realise our path to becoming fully circular.”

One concrete measure on this path is climate neutrality, which includes the switch to power from renewable sources. Covestro relies on agreements with power suppliers to facilitate this transition.

“We are thrilled to help facilitate Covestro’s entry into the US renewable energy market with this newly signed virtual power purchase agreement,” said Monica Testa, Head of Origination at Ørsted. “The Mockingbird Solar Center is a unique project that represents both preservation and progress. The clean energy produced by the solar center will help Covestro to decarbonise its operations, while the conservation of rare native tallgrass prairie habitat supports plant and wildlife biodiversity in the region. We’re proud of the important outcomes this project achieves and look forward to our continued partnership with Covestro.”

Edison Energy worked with Covestro to broker the agreement for the vPPA. Ørsted’s Mockingbird Solar Center will produce enough clean energy to power roughly 80,000 homes and is expected to begin operation in late 2024. At that time, Covestro will start executing on the vPPA, which represents nearly 20% of the Mockingbird Solar Center’s capacity.

In December 2019, Covestro concluded a supply agreement for electricity from offshore wind turbines with energy supplier Ørsted. Starting in 2025, Ørsted will provide green electricity for 10 years to supply Covestro’s production sites in Germany, generated in a newly built wind farm off the island of Borkum, Germany. At the end of 2022, Covestro had already covered 12% of its global energy requirements with electricity from renewable sources. That figure is expected to rise to 16-18% in 2023.

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