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Arla Foods has moved all of its European manufacturing sites onto renewable electricity, using long-term power purchase agreements (PPAs) to lock in supply and prices as energy volatility and decarbonisation pressures intensify across the dairy sector.

The farmer-owned dairy cooperative says that from the end of 2025 all electricity consumed at its 46 European sites is now sourced from renewables, covering around 93% of its total global electricity use.

The shift has been achieved through a mix of renewable energy certificates and long-term PPAs linked to new wind and solar projects across Germany, the UK, Denmark and Sweden, allowing Arla to secure supply while supporting additional renewable capacity in the region.

“For energy developers, long-term offtake agreements are often the condition for committing capital to large renewable projects,” said David Boulanger, executive vice president of supply chain at Arla Foods. “By signing PPAs over many years, we are reducing our exposure to fossil fuel volatility while contributing to the build-out of renewable energy in Europe.”

Food manufacturers across Europe have been accelerating renewable electricity sourcing as electricity prices remain elevated following Russia’s invasion of Ukraine, while regulators and customers increasingly scrutinise Scope 2 emissions across supply chains.

Arla’s PPAs include a 44 gigawatt-hour (GWh) annual agreement linked to wind and solar plants in Pronsfeld, Germany, near the company’s largest dairy, 20 GWh per year from two solar projects in the UK, 43 GWh from a Danish solar park and 90 GWh annually from what the company described as Sweden’s largest solar PPA to date.

The remaining electricity demand is covered by renewable certificates, including some purchased directly from Arla farmers who generate power on-site, such as through wind turbines.

The move comes alongside significant investment in electrifying Arla’s production processes, particularly in Denmark, Germany and the UK, as the company shifts away from fossil fuels.

Electricity now accounts for almost 30% of Arla’s total energy use, a figure expected to rise as further electrification projects come online.

For dairy processors, electrification presents both technical and economic challenges, particularly for heat-intensive processes, but is increasingly seen as critical to long-term decarbonisation strategies as carbon pricing and reporting requirements tighten.

“Reducing energy consumption remains our first priority, but electrification is essential to future-proofing our operations,” Boulanger added. “Using renewable electricity allows those investments to deliver real emissions reductions.”

Arla said it is now assessing options to increase the share of renewable electricity used at its operations outside Europe.

Arla Foods is owned by more than 7,600 dairy farmers across seven European countries and supplies brands including Arla, Lurpak, Castello and Puck.