From gray to green
The evolution of energy use at AMAG
When the first issue of AluReport was published in 2008, the liberalization of the electricity and gas markets in the years before had begun to give rise to a new awareness of energy as a topic. The number of providers had increased significantly, and new categories of suppliers were emerging. Nevertheless, energy widely remained little more than a vague, gray cost factor, with little need to give thought to its availability.Few people were interested in the origins of energy or in energy labeling systems. At that time, securing an energy supply meant selecting gas and electricity suppliers and agreeing a contract for a handful of years. The electricity infrastructure on the Ranshofen site dated back to the era when AMAG was founded, comprising a 110 kV switchgear operated by the Austrian Power Grid (APG) and 110/20 kV transformers owned by AMAG.
In the wake of the introduction of carbon credits in 2005 and the first conflict between Russia and Ukraine, energy cost increases of roughly 70-80% led to potential portfolios and price determinations gaining renewed attention. The impact of carbon credits on the energy market was difficult to identify and understand at the time. The conflict between Russia and Ukraine had a more pronounced impact, causing fluctuations and reductions in gas supplies across Europe in January 2006. In comparison with the energy crises of 1973 (oil crisis) and 2022 (gas crisis), the scale of price rises in the mid-2000s was relatively modest. A more fundamental rethink of energy supply structures was not deemed necessary. However, in the years following 2008, companies certainly gave consideration to reducing their energy consumption - for economic reasons but also from a fundamentally sustainable perspective.The Paris Climate Agreement in December 2015 was a major breakthrough in international climate policy. Its primary objective was reducing emissions in order to limit the increase in global temperatures to a maximum of 2°C by the middle of the century. This objective underpinned the overarching EU target of achieving net-zero emissions by 2050. Adopted in 2021, the European Climate Law enshrined these emission reduction targets in law and set the overall direction of travel. CO2 pricing became a central fiscal instrument in driving the energy transition. It produced a tidal wave of legislative proposals and regulatory changes that endure to this day. In parallel with these legislative developments, AMAG drew up an energy supply strategy with the aim of securing a sufficient supply of energy at competitive prices. It is intended to be implemented with lasting, long-term effect. AMAG turned to green electricity with proof of sustainable origins at an early stage in this phase.
Photovoltaics
The first observable indication of the company’s new focus on renewable energy sources was the installation of a roof-mounted photovoltaic system at the Ranshofen site in 2021. Its initial capacity of 6,500 kWp was soon increased to 7,100 kWp. A further 6,000 kWp of generation capacity will be added in 2024. Comprising roughly 30,000 PV modules, the augmented system will generate roughly 13 GWh of electricity per year, which corresponds to the power consumption of around 3,300 households. The system was awarded the Energy Globe Upper Austria Award in 2022. It is among the largest photovoltaic installations in Austria and is the country’s largest roof-mounted PV system. The green electricity it generates is used exclusively by AMAG. Despite its impressive size, however, it only covers a fraction of AMAG’s total electricity requirements.
Wind and hydroelectric power
It soon became clear that AMAG would have to explore other concepts to source the green electricity it needed. Power purchase agreements (PPAs) were swiftly identified as an option, with wind and hydroelectric power selected as the preferred technologies. However, as this market is only just gaining a firm foothold, it took a relatively long time to find projects in Austria of suitable scale and with an appropriate contract term. AMAG has since concluded one long-term PPA for each technology: wind and hydroelectric power. The wind power PPA comprises the purchase of electricity from three turbines, which will be erected in Lower Austria and commissioned in Q4 2024. As for hydroelectric power, the company began purchasing electricity from several hydroelectric power stations, all of which are existing facilities in Austria, in early 2024. From 2025, these measures will combine to cover around 35-40% of our electricity requirements from renewable power plants in Austria.
Gas storage
In view of the escalating conflict between Russia and Ukraine in 2022, AMAG placed an increased focus on securing its gas supply. This followed the suspension of gas supplies through Poland, the sabotage of the Nord Stream 2 pipeline and Nord Stream 1 remaining offline after maintenance. We very much appreciate the Austrian government’s decision to store 20 TWh of gas in Austrian storage facilities, which corresponds to roughly 21% of Austrian gas requirements. In addition, AMAG has procured 80 GWh of gas, which it can use in an emergency to keep its production activities at an appropriate level.
Transformer station
AMAG is also examining its electricity infrastructure, including the transformer station on our Ranshofen site, in order to ensure a stable supply of energy today and in the future. The design of the switchgear is still state of the art, as are the transformers owned by AMAG. However, the switchgear is now approaching the end of its service life. In light of net zero targets, the system has now been redesigned and augmented. APG has therefore been working for some time to construct a new transformer station, situated to the east of the existing station. This project is currently on schedule and is now on the home stretch. From the fall of 2024, the transformers will be relocated step by step from the old station to the new one. This gradual relocation will ensure that the site’s power supply remains uninterrupted. The new transformer station will become fully operational in 2025, at which point the old station will be dismantled.
Regulations and cost efficiency
There are few other areas that have been and remain subject to such fundamental changes as the energy sector. AMAG is now working on its next major challenge: replacing its natural gas use with renewable energy sources. In this context, the company must devote considerable attention to the development of Austria’s national renewable energy infrastructure. In the face of changing laws, regulatory provisions and requirements, it is important that AMAG ensures a stable energy supply and meets its targets. The first rule of sustainable business development, however, is that a company’s activities must be cost efficient and generate long-term earnings to facilitate further investment. This calls for strenuous efforts and extensive deliberations so that we can make decisions at appropriate times and keep the costs involved in securing a sustainable energy supply within an affordable framework.
