Oil majors BP (BP.L) and TotalEnergies (TTEF.PA) emerged as the winners in a 7 gigawatt (GW) Germany’s offshore wind auction worth 12.6 billion euros ($13.96 billion), highlighting the appeal of renewable assets across Europe.
Regulator named BP wind energy giant and TotalEnergies as top bidders that brought in €12.6 billion at Germany’s offshore wind auction, stating a started a new chapter on Wednesday, July 12.
BP wind energy project win
BP offshore wind projects win to develop two projects, marking its entry into offshore wind project in continental Europe and representing 4 GW out of the total, it said in a separate statement.
The Germany offshore wind auction winning bids mark both companies’ entry to the offshore wind market amid a push toward development of lower-carbon energy resources.
“This is a significant milestone for BP, showing our commitment to transitioning into an integrated energy company,” BP head of offshore wind Matthias Bausenwein said.
The power from the windfarms will be used to produce low-carbon, or green, hydrogen and biofuels as well as to supply BP’s electric vehicle charging network, he said.
As per the regulator, 90% of the revenue from the tender will go to reducing electricity costs and marine protection measures.
BP wind energy was fully aligned with its integrated energy strategy and disciplined capital allocation, adding it expected returns from the project of between 6% and 8%, as per the company.
BP’s initial payments totaling 678 million euros, equivalent to 10% of the bid amount, will be paid by July 2024. The remaining 90% will be paid over a 20-year period when the BP wind projects become operational.
Available sites
Four sites were up for grabs, three sites in the tender for building 2GW of offshore turbine capacity are located around 120 km (75 miles) northwest of the island of Heligoland in the North Sea and one with 1GW lies in the Baltic Sea, some 25 km away from the island of Ruegen, a total combined volume of 7GW.
The offshore wind auction, which utilized a dynamic bidding process for the first time after several zero cents per kilowatt hour (kWh) were submitted, took place as Germany targets 30GW of offshore wind capacity by 2030.
What BP wants
The move comes as BP seeks wind energy to grow their low-carbon businesses, a market traditionally dominated by utilities, even though returns for BP solar and BP offshore wind projects have come under pressure in recent years due to supply chain constraints and rising interest rates.
“The results confirm the attractiveness of investments in offshore wind power in Germany,” said Klaus Mueller, president of Germany’s energy regulator Bundesnetzagentur. He called the move an important step towards reaching a national offshore capacity goal of 30GW by 2030.
The high price for the Germany offshore wind auction, implied “high interest in European offshore wind sites from energy companies/developers”, as per analysts at Jefferies.
The latest offshore wind auction wins boosts BP’s global offshore wind pipeline to 9.2GW net, BP said.
TotalEnergies offshore wind auction
Awards for the other two sites, which include rights to develop, build and operate the plants and to receive network connections, went to TotalEnergies, the French company said in a statement.
TotalEnergies said it will pay the German Federal government 582 million euros, adding an annual contribution would also be paid to the electricity transmission system operators in charge of connecting the projects for 20 years from the sites’ commissioning.
TotalEnergies global offshore wind portfolio has 11GW of projects in development, under construction and in production, the company said, excluding Germany.
