The Fortescue Metals Group Ltd (ASX: FMG) share price is on the move on Monday.
In morning trade, the mining giant's shares are up 0.5% to $21.18.
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Why is the Fortescue share price rising?
There have been a couple of potential drivers of today's gains. The first is a strong night of trade for miners such as BHP Group Ltd (ASX: BHP) on Wall Street on Friday, which has given the sector a lift.
The other is the announcement of a major renewable energy deal with Genex Power Ltd (ASX: GNX) this morning.
According to the release, following a competitive process, Fortescue has entered into a power purchase agreement (PPA) with Genex Power for 337.5 megawatts (MW) of new solar energy from its Bulli Creek Solar Project in Queensland.
The PPA is intended to meet a portion of the renewable energy requirements for Fortescue's proposed Gibson Island Project in Brisbane.
Under the terms of the agreement, Fortescue will secure the solar energy and renewable generation certificates at an agreed nominal fixed price over a 25-year term.
Though, the agreement is conditional on a couple of items. One is Genex achieving financial close on the first stage of its Bulli Creek Solar Project by 31 December 2024. The other is Fortescue reaching a final investment decision on the Gibson Island Project by 31 December 2023.
Fortescue's proposed Gibson Island Project will target the production of approximately 385,000 tonnes of green ammonia a year from the green hydrogen produced onsite through a 550MW hydrogen electrolysis facility.
Fortescue Energy's CEO, Mark Hutchinson, commented:
This agreement is the first step in securing renewable power supply for the Gibson Island Project over the long term. It is the first PPA for the project and finalising it is an important milestone in our pursuit of a targeted final investment decision this calendar year.
By entering this agreement we're also helping Genex and J-POWER to deliver their project and bring new renewable energy capacity online in Queensland – close to 115MW from this first stage is surplus to our contracted share and will therefore flow back into the electricity grid.
