Just months after lobbying the Dutch government to step up its offshore wind ambitions from 5GW to 20GW, Royal Dutch Shell is looking to cut its stake in a US$1.4 billion offshore project.
Shell and its partners in the Blauwwind consortium, Eneco and Mitsubishi, are looking to sell up to 45% of their stake in the Borssele III and IV wind farms. Infrastructure contractor Van Oord is to maintain its stake.
The consortium beat 26 other bidders to win the contract to build the 700-MW project, 22km off the Dutch coast, in December 2016. Their success came just months after Shell set up a New Energies division to invest US$1 billion a year in clean energy, chiefly wind.
The bid generated great excitement in the industry largely because it suggested the project would be built with a subsidy of just 300 million euros (US$350 million) rather than the 5 billion euros (US$5.9 billion) the Dutch government expected to pay – an indication of just how quickly the costs of offshore wind are falling.
It does not look like the move is a retreat from the oil and gas giant’s commitment to renewables. Rather, as with many project developers, its focus will remain on developing the early stages of very large wind farms and selling projects on, rather than holding and operating the asset, which would offer a slower rate of return over a longer period.
This suggests that Shell is in fact tailoring its investment strategy to expand the sector by using its huge balance sheet to fund the riskiest stage of projects. This would tie in with comments made by commercial director Hessel de Jong that the company is talking to countries around the North Sea, and the European Union, about collaborative efforts between governments.
De Jong added that Shell needs the industry to scale up massively to make it worth its while to continue its investment. “For Shell to continue its offshore [wind] interest, it must become much, much bigger than it is today. There must be 10 North Seas. And we think that’s possible,” he remarked at a recent event, quoted by Offshore Wind Journal.
“The consortium partners are exploring options to attract additional investors in the project. This is part of a planned assessment by the consortium on how to best fund the project and future offshore wind projects for the long term,” Eneco said in a statement apparently endorsed by Shell and Mitsubishi. “Offshore wind projects require substantial capital and attracting solid additional investors allows each partner to free up capital to invest in new projects in future.”