By Victoria Waldersee and Ilona Wissenbach

BERLIN (Reuters) -Mercedes-Benz mentioned on Thursday it had signed an influence buy settlement (PPA) with Spain’s Iberdrola (OTC:) for 140 megawatts (MW) of wind vitality from a Baltic Sea wind park, a part of automakers’ push to make manufacturing prices extra predictable.

Manufacturing chief Joerg Burzer informed Reuters that Mercedes was specializing in securing wind capability in northern Germany and putting in photo voltaic capability within the south of the nation, which will get extra sunshine however is much less windy.

The Iberdrola deal, by which Mercedes will make investments a three-digit million euro determine, means the carmaker has photo voltaic, onshore and offshore wind PPAs for capability equal to half of its electrical energy demand in Germany by 2025, Burzer mentioned in an interview.

PPAs are long-term contracts to purchase electrical energy instantly from a generator at a pre-negotiated worth, offering producers with assured financing. Huge corporations, together with carmakers, are more and more signing such offers to raised management manufacturing prices and minimize CO2 emissions.

The contract is among the largest ever signed with a automotive firm, Iberdrola mentioned in an announcement, but additionally didn’t disclose its worth.

Iberdrola mentioned the Baltic Sea Windanker undertaking could have 315 megawatts of capability and can totally function in 2027. The Spanish energy utility already operates the 350-MW Wikinger wind farm additionally within the Baltic Sea and is constructing the 476-MW Baltic Eagle in the identical space.

Mercedes goals for 70% of its vitality demand from car manufacturing to be coated by renewable sources by 2030. It mentioned on Thursday it has reached its goal of a 50% discount in carbon dioxide emissions from 2018 ranges by 2030 early, and so is elevating that focus on to 80%.

Burzer mentioned he was assured that battery storage would develop to the purpose of enabling constant renewable energy provide, and that hydrogen would play a job in offering baseload vitality.

“In fact there are durations the place the solar does not shine and the wind does not blow, however these will not be so widespread in Europe. Hydrogen can safe the remaining half,” he mentioned.

“It’s the previous few proportion factors which might be the toughest… there may be nonetheless loads to do on the expertise aspect,” Burzer added.

Renewable vitality accounted for 46.9% of German energy consumption in 2022, with the remainder coming from coal, nuclear, and . In Europe, the newest obtainable figures from 2021 present round 22% renewable vitality consumption.

Plans to gas business through hydrogen in Germany are nonetheless of their infancy, with the development of the primary hydrogen pipeline community accepted final December.