Endesa signs wind PPA to power up Alcoa's smelter in Spain

Spanish utility Endesa SA (BME:ELE) and US aluminium producer Alcoa Corp (NYSE:AA) announced on Thursday that they have closed a power purchase agreement (PPA) for the supply of wind energy to Alcoa’s smelter in the region of Galicia, north-west Spain.

The agreement, which has its roots in a pre-PPA signed in February, will include the supply of up to 131 MW of wind power from the second half of 2025 and through 2033, and power balancing services for the smelter load from 2024 to at least 2030, Alcoa said.

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The procurement enables Alcoa to secure just over 30% of the San Ciprian smelter’s energy requirements.

Endesa said separately that it will supply 1,151 GWh per year to Alcoa under the terms. It will source the electricity from some of 816 MW of wind farms it plans to build in the Galicia region through dedicated renewables unit Enel Green Power Espana. The plan is to gradually incorporate more wind power into the PPA from 2025 as new wind farms come into operation.

The San Ciprian smelter was a profit loser for Alcoa due to exorbitant power prices in Spain, so much so that the company considered packing up. After negotiations with the San Ciprian workforce in December 2021, Alcoa decided to curtail the smelter for two years, keep paying wages, sign competitive PPAs and reactivate the facility in January 2024.

Since then, the aluminium producer closed pre-PPAs with Greenalia, Capital Energy and Endesa, as all three have sizable wind project pipelines in Galicia. The pre-agreements with Greenalia, and now Endesa, progressed to PPAs.