Energy-intensive industries, like the metals and minerals sector, need a lot of stable power for their operations. Even with increasing energy efficiency in production, energy consumption is significant, and energy prices substantially impact production costs. Furthermore, following more stringent environmental goals, companies aim to decrease emissions by switching to carbon-free electricity. Therefore, selecting the optimal energy solutions is extremely important. Nuclear power offers a stable, carbon-free power generation option at a competitive price for continuous energy needs.
Ferrochrome production requires a reliable CO2-free power supply
Vargön Alloys AB is one of Europe's largest producers of ferrochrome, an essential raw material for the steel industry. Ferrochrome gives steel its hardness and corrosion resistance and is produced in electric furnaces at extremely high temperatures, at about 2,800 °C. Vargön Alloys’ furnaces are located in central Sweden, operating continuously 24 hours a day, seven days a week, and rely on consistent electricity to maintain their operations.
Vargön Alloys is committed to sustainability and aims to use fossil-free electricity for its production. In addition to stability and carbon-free power, the company pays special attention to competitive pricing due to its large electricity consumption.
“Producing ferrochrome requires a lot of energy. It was important to us to secure power prices for the near future to enable stable production with a reliable clean energy partner like Fortum,” says Managing Director of Vargön Alloys Anders Lehman.
Choosing the best power solutions to fit your company’s needs
At the end of 2023, Anders Lehman and his team at Vargön-Alloys sought to renegotiate their power contract. In recent years, electricity prices have become more volatile, and power hedging prices have fluctuated. In the Swedish SE3 price area, prices are generally higher than in the North of Sweden as consumption is higher than production in the area, and there are some bottlenecks in the grid.
Vargön Alloys’ electricity consumption requires a steady power source. Reliable nuclear power was seen as the perfect fit to help reduce the company’s Scope 2 emissions and provide steady baseload power. Fortum has both nuclear and hydropower in the SE3 price area, hence having the perfect offering to match the customer’s needs.
After negotiations, Fortum and Vargön Alloys AB reached a tailored solution. In April 2024, the two companies signed a five-year power purchase agreement (PPA) for the delivery of approximately 0.4 TWh of electricity per annum, along with Guarantees of Origin for nuclear power. The contract term starts in December 2024 and runs until the end of 2029. The power is sourced from Fortum’s nuclear portfolio in in central Sweden, where Vargön Alloys furnaces are also located.
“This partnership reflects our dedication to securing clean energy sources for our operations and reducing emissions. Working closely with Fortum, we found an energy portfolio and pricing model to secure CO2-free electricity at a reasonable price for our baseload consumption needs. This collaboration positively impacts our business and the environment,” Lehman describes.
“We are pleased to support the decarbonisation of the Swedish export industry with our nuclear fleet in the SE3 price area. Long-term partnerships with our customers are important to us as they also bring security and predictability to us as we plan our energy production for the future,” says Patrik Hamberg, Vice President, Sales & Strategic Partnerships, Fortum.
Customer case in short
Customer name: Vargön Alloys AB
Amount of electricity delivered: 0.4 TWh of electricity per annum
Power source with guarantees of origin: Nuclear
Power Price area: SE3 (Central Sweden)
Type of contract: PPA
Customer’s requirement: Stable CO2-free baseload energy at a competitive price in the central Sweden (SE3) price area.
Solution: Shorter 5-year contract for the delivery of approximately 0.4 TWh of electricity together with Guarantees of Origin for nuclear power.
Benefits: Tailored CO2-free electricity contract with competitive pricing, to match the customer’s consumption profile, and emissions reduction.
For more information on Nuclear PPAs, please contact
Hassan El Mahdi
Sales Manager, Sweden
Tel: +46 70 859 3503
hassan [dot] el [dot] mahdi [at] fortum [dot] com
Stability and predictability for your business with PPAs
Power purchase agreements (PPAs), also known as long-term electricity purchase agreements, provide predictability and stability to both the power generator and the purchaser.