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Mercedes Signs Deal With Spanish Renewables Giant

Mercedes-Benz has signed a power purchase agreement (PPA) for 140 megawatts of wind energy with Spain's Iberdrola.

The agreement with Iberdrola will support Mercedes-Benz in meeting its renewable energy goals while shaving production costs and reducing carbon emissions, production chief Joerg Burzer said.

The deal is expected to be in the hundreds of millions of euros.

Investing in renewable energy through PPAs provides producers with secured financing while stabilizing energy prices, which will benefit the carmaker's financial position in the long run.

PPAs are contracts allowing companies, including auto manufacturers, to buy electricity directly from their source at a pre-arranged price, providing the buyer with a long-term fixed-price energy supply.

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According to Mercedes-Benz's production chief Joerg Burzer, installing wind capacity in northern Germany and solar capacity in the southern part of the country is the carmaker's energy focus.

To secure the remaining energy demand, Burzer envisions that hydrogen will play an integral part in providing base-load energy.

Burzer told Reuters, "Of course there are periods where the sun doesn't shine and the wind doesn't blow, but these are not so common in Europe. Hydrogen can secure the remaining part."

"It is the last few percentage points that are the hardest... there is still a lot to do on the technology side.”

Iberdrola reports that the Baltic Sea Windanker project is expected to begin operation in 2026 with 300 megawatts of capacity.

The auto manufacturer disclosed early this year that it had achieved its target of reducing CO2 emissions by 50% by 2030 from 2020 levels and is now pushing for a revised target of 80%.

The new target aims to ensure Mercedes-Benz's endeavor to achieve its emissions goals by sourcing renewable energy.

Without innovative and sustained improvements in technology to support large-scale use of renewable energy, the transition will remain a challenge, and as Mercedes' Burzer pointed out, it is the last few percentage points that will prove particularly difficult to achieve.

By Michael Kern for Oilprice.com

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