• 3 minutes Could Venezuela become a net oil importer?
  • 7 minutes Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 12 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 14 hours Could Venezuela become a net oil importer?
  • 6 hours Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 18 hours Tesla Closing a Dozen Solar Facilities in Nine States
  • 14 hours Gazprom Exports to EU Hit Record
  • 16 hours EU Leaders Set To Prolong Russia Sanctions Again
  • 14 hours Could oil demand collapse rapidly? Yup, sure could.
  • 1 hour Oil prices going Up? NO!
  • 14 hours Oil Buyers Club
  • 17 hours Why is permian oil "locked in" when refineries abound?
  • 7 hours Oil prices going down
  • 17 hours EVs Could Help Coal Demand
  • 24 hours China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 23 hours Saudi Arabia plans to physically cut off Qatar by moat, nuclear waste and military base
  • 5 hours Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
  • 22 mins Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 12 hours Saudi Arabia turns to solar
Alt Text

Can Deep Water Wind Farms Power The World?

A recent study suggests that…

Alt Text

Tesla’s New Frontier: Batteries And Wind

Electric car builder Tesla and…

Gregory Brew

Gregory Brew

Gregory Brew is a researcher and analyst based in Washington D.C. He is currently pursuing a PhD at Georgetown University in oil history and American…

More Info

Trending Discussions

Will Offshore Wind Energy Become A Success In The U.S.?

Dong windfarm

The United Kingdom has just approved the world’s largest offshore wind farm, the Hornsea Two project. In contrast to the delays and suspicions raised over Britain’s nuclear facility at Hinkley Point C, the country has signed off on a £6 billion plan ($7.8 million) to construct 300 wind turbines 50 miles off the coast of Yorkshire. The farm’s combined output will equal 1.8 GW, enough to power 1.6 million homes. If it proceeds on schedule, Hornsea Two (H2) will be completed in the mid-2020s.

At the forefront of the project is Dong Energy, a Danish green energy construction company which has been pushing to expand its profile on both sides of the Atlantic all summer. With off-shore wind energy a very expensive means of generating power, as well as one with some potentially negative environmental impacts of its own, DE has taken advantage of domestic subsidies for green power and the momentum of the green energy movement to expand its profile. Its CEO has even gone on the record as “skeptical of new nuclear,” a clear attack on the struggling Hinkley Point project: he clearly feels that off-shore is a safer and cheaper bet in the long term.

Dong Energy is already on the line to construct Hornsea One (H1), a separate wind farm of 176 turbines in an adjacent area. Due to be completed in 2020, H1 will join three other wind farms off the Yorkshire coast. The UK has committed itself to an expansive off-shore wind program, which seeks to provide 10% of the country’s power by 2020.

Owned in part by the Danish government and investment bank Goldman Sachs, Dong went public in May 2016 in what was the largest IPO of the year in Europe, up to that point: $16 billion (£11 billion) was floated, of which the Danish government retained 50.1% of the shares (it owns 59% of the company overall). A series of previous IPO attempts had been withdrawn due to unfavorable market conditions. Dong’s offering was a clear statement that company expected the market for offshore wind power to grow and grow.

And it may be right. In Europe, there are currently 84 projects to construct off-shore windfarms in 11 countries. Dong was formed out of a number of oil, coal and gas companies but now focuses on renewables. After recording a 35% increase in Q1 profits for 2016, it launched its IPO confident that the Hornsea project would go forward. Related: Oil Product Demand In This Middle-East Nation Just Hit An All-Time High

But the winds have been a little gusty for Dong in recent months. The firm expressed optimism about its future after the British vote to leave the European Union in June. It recorded Q2 loses of $278.3 million, mostly from its oil and gas operations. Some investors were upset when Goldman Sachs sold off a portion of their share in the company before the float, triggering a minor political crisis in Denmark.

Wind farms like the massive H1 and H2 are extremely expensive, considering the amount of power they generate. Dong has taken advantage of subsidies from the British government to meet construction and operating costs. It received subsidies totaling £4.2 billion to construct H1, and its contract with the British government in 2014 allows it to sell energy at 140 per MW-hour of power, three times the commercial rate. Opposition to these subsidies means that further projects are impeded. Dong withdrew from another wind-farm in England in August, citing the failure to make it commercially viable.

But Dong has looked beyond England for its future growth. The United States lags behind Europe in investing in wind farms: cheap alternatives, lack of regulation and local/political opposition make them impractical. A $2.6 billion project to construct turbines off the coast of Nantucket had to be canceled due to strong objections from locals upset that their views would be impeded. Related: Can Oil Prices Continue To Rally Like This?

But that is beginning to change. The first off-shore turbines in the US were recently installed three miles off the coast of Block Island, Rhode Island by Deepwater Wind. On August 1 the Massachusetts state legislature passed a resolution committing the state to contracting 1600 MW of off-shore wind power. Last year Dong leased an area of land off the coast of Massachusetts and now plans to construct a wind farm that will generate an estimated 1000 MW of power.

While Massachusetts has taken a relatively radical step in embracing offshore wind power, it is possible that other states might follow suit. With demand in Europe likely to grow, and a possibility of further growth across the Atlantic, Dong Energy looks ready to expand its profile and seize further opportunities in the changing energy environment.

By Gregory Brew for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment
  • Anonymous on August 21 2016 said:
    Pound to Dollar isn't properly translated, should be "billion" instead of "million". Thanks for the article though!
  • Pinal on August 27 2016 said:
    Rightly mentioned there will be some major issues faced by the industry in entering U.S Market. But as i read in another report goo.gl/86jlfp this industry is sure to surge in coming years. Insightful article!!
  • George on October 13 2016 said:
    Thanks GREGORY BREW for sharing this impressive post with us. I found your thought innovative.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News