Hydro anticipates green premiums as solar plant starts up at Brazil’s Alunorte

The project, which powers the world's largest alumina refinery outside China, Alunorte, not only marks a significant leap towards sustainability but also showcases Norsk Hydro's commitment to reducing carbon emissions

With developments in terms of decarbonization and sustainability, Norsk Hydro expects the market to pay premiums for greener, more sustainable products, the Norwegian aluminium producer told Fastmarkets by email on Thursday March 14.

This comes after the company started up its new solar plant, developed in a partnership between renewable energy solutions providers Scatec, Equinor and Hydro Rein, a subsidiary of Norsk Hydro established in 2021; the plant has a total power of 531 megawatt (MW), and began powering the Alunorte alumina refinery in Brazil this month.

According to a press release published on March 8, Alunorte will purchase approximately 60% of the expected power produced through a 20-year, USD-denominated power purchase agreement (PPA). The remaining power produced will be sold in the Brazilian power market.

All three partners have an equal economic interest of 30% in the project. In conjunction with the start of commercial operations, Alunorte has exercised its call option and now holds the remaining 10% interest, according to the press release.

Hydro Rein has more than 60 renewable energy projects under development in core markets in the Nordic countries and Brazil.

Alunorte, the world’s largest alumina refinery outside China, is located in the city of Barcarena, in Pará state. The refinery has a nominal alumina production capacity of 6.3 million tonnes per year.

Part of the alumina produced is exported and the other part is supplied to the Albras plant, also located in Barcarena, which produces aluminum ingots, according to Hydro’s website.

In addition to the new solar power plant, Hydro’s project to install electric boilers at Alunorte – one installed last year and two more in the process of being installed this year – will result in a reduction of around 550,000 tonnes of carbon emissions, according to information provided to Fastmarkets. This reduction is made possible due to the renewable solar and wind energy generated by the Mendubim and Ventos de Zacarias projects.

Hydro Alunorte to reduce CO2 emissions by 0.2 tonnes by 2025

In total, the decarbonization initiatives at the Hydro Alunorte refinery will reduce approximately 0.2 tonnes of carbon dioxide (CO2) per tonne of alumina in 2025 versus 2017 levels, which represents a reduction of about 0.4 tonnes of CO2 per tonne of aluminum metal production.

“Our alumina is already a low-carbon product, and by the end of 2024, we will increase the reduction of 1.4 million tons CO2 per ton of alumina, following our ambition to produce zero-carbon aluminum by 2050. All these initiatives are part of the journey to decarbonize Hydro’s operations on the path to green aluminum,” a company spokesperson told Fastmarkets.

Carlos Neves, Alunorte’s operations vice president, said in the press release that the decarbonization initiatives for greener alumina at Alunorte will make it one of the lowest-carbon emitting refineries in the world by 2030, and reach zero emissions by 2040.

Fastmarkets calculated its alumina index inferred, fob Brazil at $389.16 per dry metric tonne on Monday March 18, up from $388.96 per dmt on Friday March 15.

Stakeholders around the world have been worried about carbon emissions as an important issue in the global energy transition.

Fastmarkets launched low-carbon aluminium differentials for Europe in 2021, for the US in 2023 and for East Asia this month.

Fastmarkets assessed the aluminium low-carbon differential P1020A, Europe at $10-25 per tonne on March 1, stable since December 1.

On the other hand, the initial aluminium low-carbon differential P1020A, Japan, South Korea assessment was at $0-10 per tonne on March 1.

The aluminium low-carbon differential P1020A, US Midwest was assessed at $0 per lb on March 1, stable since Fastmarkets began tracking it on November 3.

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