Wind farm seabed leasing has to speed up in order to truly reach the global climate goals; however, it would also help the offshore wind industry itself, as it struggles with more competition and higher prices.
Firstly, Mad Nipper, CEO of Orsted, the world’s largest developer of offshore wind farm, said to the Financial Times that governments must speed up the leasing of seabeds if climate targets are to be met.
Secondly, he remarked that around the world there is clear appetite from a growing number of companies to develop offshore wind farm; however, delays to licensing are risking investments, and pushing up costs as competition increases.
Thirdly, he also remarked to the Financial Times, “there needs to be an exponential increase in the availability of seabed.” He said, further warning that the pipeline of seabed auctions; and also licensing rounds was particularly narrow this year.
Moreover, he highlighted that Orsted is speeding up its ambitions regarding wind farms and wind energy; the company in fact is targeting 50GW of installed renewable projects by 2030 from a previous target of 30GW.
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Wind farm industry may have imbalance after huge appetite from competitors
In addition, the company’s target is to become a “green supermajor”, and compete with big oil companies in the energy transition; especially as oil supermajors like BP, Chevron and other are increasing their investments and projects in renewable energy.
However, as reported by the FT, the company has been facing some let downs. Firstly, after reaching an all-time high, Orsted’s shares dropped 38% as investors grow skeptical of the speed of the sector’s rally.
Secondly, the stock further endured the hit of April’s news that the company had a DKr3bn bill linked to damaged cables at 10 wind farms but is still up more than a fifth since the start of 2020.
On the other hand, Nipper warned about the rising costs of seabed auctions in the UK; he said that companies were “desperate” to grab offshore licenses; as they play catch-up in offshore wind. However, such desperation is leading to imbalances.
Finally, Nipper said. “Those people who have shown the highest interest in buying a foot in the door’s industry; they have the potential to create imbalances that are no good for the industry. Those imbalances will make the industry less competitive; and will also end up having less-value products.”