Big oil buys into UK wind farm auction
February 9, 2021 - Britain has auctioned seabed rights that will allow around 8 gigawatts of new wind farms -- enough to power more than 7 million homes -- with oil majors BP and Total taking a majority of the projects.
BP’s bids were about 80% higher than the average of its competitors for the new sites. The seven successful bidders will pay about $1.2 billion per year in total for up to a decade to develop the wind farms.
A consortium of BP and German utility EnBW Energie Baden-Wuerttemberg AG agreed to pay £154,000 (€175,170, $211,000) a megawatt per year for the right to build their site during the development phase. Once the project starts generating power, the payment will shift to a percentage of the revenue.
The bids are a blow for incumbents including Danish utility Ørsted, Portugal’s EDP Renováveis and Spain’s Iberdrola that have previously dominated offshore wind development in UK waters.
In the North Sea, companies working in the declining oil and gas sector are now shifting their focus, driven by the winds of change. Ørsted is typical of that change -- some eight years ago Ørsted changed its business model, transitioning from fossil fuels to offshore wind.
In 2017, Norway’s Statoil -- which renamed itself Equinor -- began constructing the world’s first floating offshore wind farm near Peterhead in Aberdeenshire, Scotland.
Britain is the largest producer of offshore wind power globally, and Prime Minister Boris Johnson has pledged to make it “the Saudi Arabia of wind.” Johnson plans to quadruple offshore wind capacity by 2030.