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Top Offshore Wind Firm: Big Oil’s Foray Into Green Energy Could Hike Prices

The biggest developer of offshore wind farms in the world, Denmark-based Ørsted, is concerned that the race of the biggest oil companies to enter offshore wind could lead to spikes in seabed acreage prices, which would undermine project competitiveness and the speed of technology development.

“Our concern is that if that inflation continues it will eventually come to the disadvantage of the speed with which we accelerate the technology or the competitiveness of the technology,” Ørsted’s chief executive officer Mads Nipper told Reuters in an interview ahead of the conference Reuters Events: Global Energy Transition.

Major international oil firms, including Europe’s biggest Shell, BP, Equinor, and TotalEnergies, have accelerated investments and development of offshore wind both in Europe and in the United States as they plan to boost their renewable energy portfolios in their net-zero emissions commitments.

Norway’s Equinor says it is “determined to be a global offshore wind energy major.” All oil firms going into offshore wind pitch their offshore experience and skills as key enablers of becoming major players in the sector.

But the race for seabed acreage for building offshore wind farms could drive prices much higher, especially if governments do not make more areas available to offshore wind development, Ørsted’s Nipper told Reuters.

“If substantial amounts are to be made available then there is going to be enough for everybody,” he said.

In some major recent deals, BP and its partner EnBW were selected as preferred bidder for two highly advantaged 60-year leases in UK’s first offshore wind leasing round in a decade. TotalEnergies entered earlier this month into a giant offshore wind farm project in the Scottish North Sea. 

At the start of this year, Equinor and BP were selected to provide New York State with offshore wind power in one of the largest renewable energy procurements in the U.S. to date. 

Ørsted, for its part, plans to invest the equivalent of over US$57 billion by 2027 as part of a new strategy to become a global green energy major.

Ørsted, which currently has 12 gigawatts (GW) of installed renewable capacity around the world, plans to nearly triple that capacity to 50 GW by 2030, the company said on its Capital Markets Day in early June.

By Tsvetana Paraskova for Oilprice.com

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