On Monday 24th, UK-based Octopus Energy Generation announced it plans to invest USD20 billion in offshore wind projects worldwide by 2030. The company said the investment will mainly be focused on Europe.
Octopus Energy Generation, owned by Octopus Energy Group, manages USD7.7 billion of green energy projects in the world. The company entered the offshore wind market last year and has since made five deals worth a total of USD1 billion, acquiring stakes in wind farms in England and the Netherlands.
Announcement at a time of turbulence for the wind industry
Octopus Energy’s announcement comes at a difficult time for the wind industry, despite a long-term attractiveness within Europe.
At the end of June, Siemens Energy announced it had discovered issues with some of its turbines, affecting up to 15-30% of its fleet worldwide. The announcement has shaken investors’ confidence in the wider industry.
This came in a wider context of high production costs due to rising commodity prices. Last week, Swedish utility Vattenfall announced it was stopping the development of one of its British offshore wind farms due to rising capital costs and inflation. The project initially won an auction last year, with a guaranteed price of around 45GBP/MWh, a price no longer reflective of the current market conditions anymore, according to Vattenfall’s wind business head quoted in Reuters.
In addition, traditional wind developers are seeing increasing competition with oil and gas majors looking to diversify their portfolios. In July, Total and BP won the biggest offshore wind auction (7GW) ever held in Germany with zero-subsidies bids, investing around USD14 billion.
Octopus Energy’s investment plans show the increasing competitiveness of offshore wind in Europe and the UK, pushed by high and volatile fossil fuel prices as well as more ambitious EU targets. A legislation speeding permitting process should also be fully adopted in the next months. However, additional incentives will be required if Europe and the UK hope to hit their 2030 wind targets.
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Image credit: Octopus Energy