High stakes at sea in global rush for wind power

London, Apr 10 (Reuters): Global competition for offshore wind power is so hot that licence auctions now resemble the oil and gas competitions of just a few years ago, and some of the names are familiar too as global oil majors move aggressively into renewable energy.
The drive among top fossil fuel producers to make fast inroads into lower-carbon businesses comes as more and more countries roll out plans to boost wind power in an effort to reduce their carbon footprint. The cost of securing sites to develop has risen to levels that some top wind farm operators say are unsustainable and which will hurt consumers by driving up power prices. Governments worldwide are expected to offer a record number of tenders for offshore wind sites and capacity this year, with more than 30 gigawatts (GW) on the block. That is almost as much as total existing global wind capacity of 35 GW, and the tenders are shaping up to be the most competitive ever.
Several European oil firms including Total, BP and Shell plan to rapidly increase their renewable power portfolios, reducing reliance on oil and gas to satisfy investors who want to see viable long-term low-carbon business plans and governments which are demanding reductions in emissions.
The oil majors, with deep pockets, are willing and able to pay up for a foothold in the market, even though margins are much smaller than for their traditional operations.
At a leasing round held by the Crown Estate earlier this year for seabed options around the coast of England, Wales and Northern Ireland, BP and German utility EnBW paid a record price to secure two sites, representing 3 GW.
Developers pay an annual option fee prior to taking a final investment decision (FID), which in the case of BP and EnBW will amount to around 1 billion pounds ($1.38 billion) made in four annual payments of 231 million pounds for each of the two leases.
Traditional offshore wind developers, Iberdrola, Orsted and SSE all confirmed to Reuters they had been unsuccessful in the leasing round.
The previous Crown Estate offshore round was held more than a decade ago when the market was a fraction of its current size and structured without option fees, an added cost developers will now have to recoup.
‘Asia is going to be a huge market for renewable growth globally and we as a global player want to be actively participating in that,’ said Jonathan Cole, managing director at Iberdrola Renewables’ offshore wind division.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button