Wind turbines in the North Sea of the coast of Essex, UK. Picture: BLOOMBERG/CHRIS RATCLIFFE
The winning companies will pay about $1.2bn a year in total for up to a decade to develop the wind farms. BP led the bidding with an offer about 80% higher than the average of its competitors in the auction for sites in the waters around England and Wales, an area it is long familiar with through its oil operations.
Winning bids came from a consortium of BP and German utility EnBW Energie Baden-Wuerttemberg for a total capacity of 3GW, while a partnership of Total and Macquarie Group’s Green Investment Group got 1.5GW and RWE’s renewables arm won 3GW. Cobra Instalaciones y Servicios and Flotation Energy, a floating wind farm specialist, will jointly develop a 480MW site.
The victory in the UK waters certainly comes at a steep price. BP and EnBW agreed to pay £154,000/MW a year for the right to build on sites in the Irish Sea, or almost £500m annually during the development phase. Once the project starts generating power, the payment will shift to a percentage of the revenue.
The auction results will be a major loss for incumbent players such as Orsted, Iberdrola, Equinor and SSE that have previously dominated the offshore wind sector in the UK.