May 28

Shell, BP, Orsted Winners in Huge Scottish Wind Auction

Stephen Bierman
Jan 17, 2022
The auction attracted considerable interest from some of the region's biggest energy producers, implying that the competition for offshore wind is heating up.
Image: Nicholas Doherty via Unsplash.

Scotland is forging ahead with net-zero carbon aims, and many leading European oil producers have jumped on board with the plan, taking acreage in its massive auction for offshore wind development rights. 

Just months after hosting world leaders as they worked on fighting climate change at CO26, Scotland has awarded 17 offshore wind projects – including bids from Shell, BP, and Orsted – Crown Estate Scotland said in a statement today. The projects encompass 24.8 gigawatts of future generation capacity, with participants paying almost 700 million pounds for the offshore acreage.

“Today’s results are a fantastic vote of confidence in Scotland’s ability to transform our energy sector.  Just a couple of months after hosting COP26, we’ve now taken a major step towards powering our future economy with renewable electricity,” said Simon Hodge, Chief Executive of Crown Estate Scotland.

Wind generation continues to grow in Europe as traditional petroleum producers see reduced emissions in the future and seek to get into the renewables game. This is particularly true in offshore areas which require big ticket investment. Big oil can also bring to bear previous competencies exploiting North Sea oil including in supply lines, and support relationships and technological skill.

Floating wind is among the technological advances that showed up in the Scottish auction, as Shell and partner ScottishPower, among others, plan to use the kit to move turbines further offshore into higher wind zones.

The companies created ventures to develop two of the world’s first large-scale floating offshore wind farms, representing 5GW capacity, according to a statement by Shell.

“Floating wind plays to our strengths in deeper offshore projects, and we are well placed to help advance the wider take-up of this important clean energy source,” said Wael Sawan, Integrated Gas and Renewables and Energy Solutions Director at Shell. “Renewable electricity will play an increasingly important role in our customer-focused strategy.”

Almost 80% of Europe’s offshore wind resource is situated in waters too deep for conventional bottom-fixed wind turbines. Floating wind platforms are a proven technology to unlock these deeper waters, but this is the first plan to deploy them at this scale anywhere in the world, according to the release.

The new wind farm ventures will be called MarramWind and CampionWind which are slated to generate 3GW and 2GW respectively.

A consortium of Orsted, Falck Renewables and BlueFloat Energy also entered into an Option Agreement for a 1 GW new floating offshore wind site off the north-east coast of Scotland.

“I commend Crown Estate Scotland for awarding lease rights at large scale and with focus on development phase commitments, which is exactly what is needed to allow for financially sustainable development and to make floating and deeper water wind cost-competitive,” said Martin Neubert, Chief Commercial Officer and Deputy Group CEO at Ørsted.

Meanwhile, BP and EnBW took potential generating capacity of 2.9GW, enough to power more than 3 million homes in fixed-bottom projects in the auction. The British company sees the successful bid unlocking a number of additional investments including significant expansion in electric vehicle charging infrastructure and green hydrogen.

BP said that Aberdeen will become its operations and maintenance center for offshore wind. The winning bid raises its total portfolio of offshore wind projects with EnBW to 6GW.

BP’s strategy includes plans to increase low-carbon investment to around $5 billion a year by 2030. It aims to have developed 50GW of net renewable generating capacity by that date.

Reviews were mixed on the results of COP26 – the carbon reduction pledges it was able to squeeze out of world leaders. Scotland’s auction of offshore acreage looks more decisive.

It sets into motion projects that will provide renewable electricity to homes, unlocks a power source for related green investment, including into hydrogen, and develops the latest technologies such as floating generation, which builds a better base for generation and profitability in future projects.

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Stephen Bierman

Stephen Bierman is a finance and energy reporter with over 15 years of experience, including at Bloomberg News and Energy Intelligence.

Tweets at: @StephenBierman1

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