LG Chem has signed an agreement to supply 140 GWh of renewable energy for the cathode materials factory – Leyou New Energy Materials, in Wuxi, Jiangsu Province, China, from the local wind and solar power sales company Yunfengxin Energy.
LG Chem plans to introduce “good electricity” from renewable energy in its global operation sites to achieve carbon-neutral growth by 2050.
The capacity of 140 GWh can power approximately 30,000 households for a year, which can supply all electricity required by the cathode materials factory in Wuxi.
The deal was reached as a power purchase agreement (PPA), in which eco-friendly electricity generated through wind and solar power is supplied directly to the factory without an intermediary. LG Chem is the first Korean company operating in China to use this form of agreement.
PPA allows the supply of electricity at a fixed price through a direct agreement with the power company. Compared to other ways of supplying renewable energy, such as purchasing renewable energy certificates (REC) or generating power independently, PPA provides stable supplies of energy at an affordable cost and is recognized universally as a measure of reducing carbon emissions.
LG Chem’s Wuxi cathode material factory is projected to operate solely using renewable energy from 2021, reducing 100,000 tons of carbon emissions compared to the conventional use of industrial power.
While reducing emissions at a rate equivalent to planting 1.7 million trees, this measure will also boost cost-efficiency vis-à-vis using the conventional form of industrial electricity.
“The conclusion of this PPA in China is a key strategic move towards LG Chem’s promise of achieving carbon-neutral growth by 2050. To achieve RE100, we will continue to solidify our standing as a pioneer in sustainability by actively promoting efforts to secure renewable energy in Korea and abroad.”CEO Hak Cheol Shin.