The difference between HKN and PPA when purchasing green electricity

No green energy, no green steel - This is the rationale behind SalzgitterAG's deliberate choice to opt for a Power Purchase Agreement at the end of 2022, as opposed to the exclusive purchase of Guarantees of Origin (GOs). – Why?

A guarantee of origin is a digital certificate that confirms the renewable origin of electricity. By purchasing GO certificates, companies can "colour" part of their purchased grid electricity green. Although proof is provided that renewable energy has been generated, there is no direct link to the energy supply of the company in question.

This approach result in a limited impact on the actual reduction of CO₂ emissions and offers less influence on the company-wide sustainability strategy compared to the direct purchase of energy through a PPA.

A Power Purchase Agreement (PPA) is a long-term agreement between a power purchaser and a wind or PV park. The purchaser buys electricity directly from the park, sharing the production risk of renewable energies. A PPA enables companies to integrate green energy into their production processes, thereby significantly reducing their carbon footprint. This agreement has enabled Peiner Träger GmbH to source approximately a third of its electricity from renewable sources since the beginning of the year. As a result, the company is now able to offer CO₂-reduced beams and sections made from SALCOS® Structural Steel in its low-emission steel production via the electric furnace route. Further information can be found here.

Details of Salzgitter AG's PPA with ENGIE can be found here.