bp and TotalEnergies to Build Wind Farms Offshore Germany
The German Government has awarded the rights to bp and TotalEnergies to develop four offshore wind projects in its latest tender round. The tender supports Germany’s target of having 30GW of offshore wind projects installed by 2030, at least 40GW by 2035 and at least 70GW by 2045.
bp has been awarded the rights to develop two offshore wind projects in the German tender round, marking its entry into offshore wind in continental Europe.
The two North Sea sites, located 130km and 150km offshore in water depths of about 40m, have a total potential generating capacity of 4GW. Subject to receiving the necessary permits and approvals, these would be bp’s first offshore wind projects in Germany and are fully aligned with the company’s integrated energy company strategy and disciplined capital allocation.
bp will lead the development, construction, and operations of these fixed-bottom offshore wind projects, with grid connection targeted by end of 2030. bp’s global offshore wind pipeline now totals up to 9.2GW net to bp.
“These awards are a huge milestone for bp’s decarbonization plans in Germany and are a strong reflection of our wider strategy. The renewable power we aim to produce will anchor the significant demand we expect for green electrons for our German operations, from a whole host of products and services including green hydrogen and biofuels production, electric mobility growth and refinery decarbonization,” Anja-Isabel Dotzenrath, bp’s executive vice president, gas and & low carbon energy, said.
Continuing, she said: “Germany is a core market for bp, and we are excited to continue and grow our business here. The investment is fully aligned with our integrated energy strategy and is accommodated within our disciplined capital frame. Expected returns of 6-8% are consistent with our renewables and power growth engine on an unlevered basis, with the potential to realize enhanced value through integration across the Germany value chain.”
Initial payments totalling €678m, 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 projects become operational in the next decade.
bp and its predecessor companies have been operating in Germany for nearly 120 years and today it employs about 4,000 people in the country. bp operates two refineries in the country and Aral – Germany’s leading retail network with c 2,300 sites. It’s also a leading provider for EV fast charging, providing 1,500 charging points in country.
Its main German offices are in Bochum, and it recently expanded its Hamburg office to support its low carbon activities, including offshore wind and electric vehicle charging. bp has extensive low carbon hydrogen plans in country and earlier this year unveiled Europe’s first charging corridor for heavy-duty electric trucks.
bp’s head of country, Patrick Wendeler, added: “We are investing massively in Germany’s energy transition and in our own – from renewable power generation to having an impact on the decarbonization of road transport to the decarbonization of our refineries. Our major existing businesses here are transforming – powered by green hydrogen, biofuels, and offshore wind. And today’s win accelerates the pace of change as we look to do more. We look forward to the important role we can play in contributing to Germany’s energy transition and its efforts to become climate neutral in 2045.”
To date, bp has an offshore wind pipeline with a potential generating capacity, with their joint venture partners, of up to 5.2GW net to bp with projects under development off the US east coast and in the UK in the Irish and North Seas. It has also formed a partnership in Japan with Marubeni and earlier this year acquired a majority stake in a project portfolio of four potential projects in South Korea.
TotalEnergies has been awarded by the Bundesnetzagentur (German Federal Network Agency) two marine concessions, N-12.1 and O-2.2, at the end of the auction held in Germany.
Located in the North Sea, 170 kilometres off the coast, concession N-12.1 covers an area of around 200 square kilometres. Located in the Baltic Sea 40 kilometres from the coast, concession O-2.2 has a surface area of around 100 square kilometres.
Green electricity for over 3 million households
The concessions will run for a term of 25 years, extendable to 35 years. With capacities of 2 GW and 1 GW respectively, these two wind farms will provide a volume of electricity equivalent to the consumption of over 3,000,000 homes. Following these awards, TotalEnergies will pay the German Federal government 582 million euros, which will be allocated to the conservation of the marine environment and the promotion of environmentally friendly fishing. An annual contribution will also be paid to the electricity transmission system operators in charge of connecting the projects for 20 years from commissioning of the sites.
The production generated by these sites will be marketed by TotalEnergies, either by selling it directly on the electricity market, or by entering into Power Purchase Agreements (PPAs) with end-buyers, enabling them to reduce their carbon footprint. These projects, which are cost-competitive given the quality of the sites, are in line with the company’s strategy of becoming an integrated player in the electricity markets, taking advantage of price volatility. They will contribute to the Integrated Power Business Unit’s objective of reaching a two-digit profitability.
Commissioning by 2030
These major projects are in line with the German government’s objective of deploying 30 GW of offshore wind power in Germany by 2030. The next step for TotalEnergies will be to carry out the studies required to obtain the environmental permits, as well as the technical analyses on these sites, leading to investment decisions in 2027 and commissioning by 2030.
“TotalEnergies is proud to leverage its expertise in offshore and large-scale projects to build these giant wind farms, which will make a significant contribution to the development of renewable electricity in Europe by 2030. Our entry into offshore wind power in Germany, Europe’s largest electricity market, is a key step in the implementation of our strategy to become an integrated profitable player in the electricity markets. After the commissioning of a floating LNG regasification unit at the Lubmin terminal in January 2023, this is a further commitment by TotalEnergies to deploy our multi-energy strategy in Germany and contribute to the country’s, and Europe’s energy security,” said Patrick Pouyanné, chairman and CEO of TotalEnergies.
