Huge news for the UK green renewable sector spearheaded by Boris

Oil majors outbid green energy firms to build offshore UK windfarms

By WILLIAM MATHIS AND LAURA HURST on 2/8/2021

(Bloomberg) --Oil majors agreed to pay a hefty premium to develop the next generation of major British offshore wind farms after BP Plc and Total SE won contracts in an auction ahead of many of the utilities that have dominated the space until now.

The Crown Estate auctioned seabed rights that will allow about 8 gigawatts of new wind farms, enough to power more than 7 million homes. With oil majors taking a majority of the sites, it’s a sign that green energy companies are facing a new era of competition for some of the world’s biggest renewable energy projects.

The winning companies will pay about $1.2 billion per year in total for up to a decade to develop the wind farms. BP led the bidding with an offer about 80% higher than the average of its competitors in the auction for sites in the waters around England and Wales, an area it’s long familiar with through its oil operations.

“These huge upfront costs will put up barriers to entry for utilities and oil and gas companies without very deep pockets,” Barclays Plc analysts led by Dominic Nash said in a note.

Big Wind

It’s the first time in a decade the Crown Estate has offered seabed for new wind farms and the first time it’s done so with this kind of competitive auction. The industry has changed drastically in the meantime as the cost of construction and financing plummeted and competition for the projects has soared, most notably from traditional fossil-fuel producers.

Winning bids came from a consortium of BP and German utility EnBW Energie Baden-Wuerttemberg AG for a total capacity of 3 gigawatts, while a partnership of Total and Macquarie Group Ltd.’s Green Investment Group got 1.5 gigawatts and RWE AG’s renewables arm won 3 gigawatts. Cobra Instalaciones y Servicios SA and Flotation Energy Plc, a floating wind farm specialist, will jointly develop a 480-megawatt site.

Getting hold of the seabed rights is the crucial first step in building a wind farm, a process that can take years.

Renewable Power

The development rights will also be key for BP and Total to realize the oil companies’ goals to dramatically scale up their renewable power businesses.

https://www.worldoil.com/news/2021/2/8/oil-majors-outbid-green-energy-firms-to-build-offshore-uk-windfarms?fbclid=IwAR2ylNdxWEffctzfsHvPWEpNc6rDWBPEwBn5tCbIOxbdbFDvDSRNVakz9EQ