Norway Selects Four Areas to Enhance Offshore Wind Strategy
With increasing agitation related to emissions by the energy companies, the oil giants are trying to diversify into other renewable sources of power.
Concerns about climate change and extreme weather events like hurricanes, wildfires and droughts are high. According to scientists, these calamities are a result of global warming. These are compelling the oil companies to add low-carbon products and services to their businesses.
Norway Finds Solution in Windfarms
Few years back, Norway - the largest oil producing country in Europe - identified offshore wind as one of the major sources of renewable energy. While the offshore wind technology development gai ned prominence back in 2010-2013, the price boom in the oil and gas industry caught the attention of most Norwegian engineers. Therefore, numerous local companies could not participate in offshore wind development.
Currently, at the 2018 Energy Outlook conference, Norway's minister of petroleum and energy stated intentions to strengthen the supplier industry by enhancing offshore wind strategy. Though the option for building offshore windfarms in Norway is limited, the region has more accessible and unexploited wind resources onshore.
However, four areas that are considered appropriate for offshore wind projects have been recognized by the Norwegian Water Resources and Energy Directorate. Later in 2018, the government will decide the two areas that canbe developed for windfarms.
It is expected that one or both the projects will be linked to an oil and gas facility for electricity generation, instead of power transmission into the national grid.
Equinor ASA EQNR -the Norwegian energy major- owns the 30 megawatt Hywind Scotland, which is the world's first commercial floating offshore wind farm, with Masdar.
Equinor holds a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here .
Equinor's diversification into windfarms comprises two stages. The company plans to develop its competencies in offshore wind projects. Also, it intends to lower emissions by substituting gas with wind as a source of power generation for a platform.
Initiatives by Other Oil Companies
Royal Dutch Shell plc RDS.A intends to reduce carbon footprint by 50% through 2050 by growing into renewable energy and reducing exposure in oil and gas. The company plans to allocate about 4-7% of its investments into renewable sources of energy, especially wind, solar and gas, until 2020.
In December 2016, a consortium led by Royal Dutch Shell, won a tender for the 680-megawatt Borsse le III and IV zone in the Dutch North Sea. Since then, the company has divested 45% stake in the project to Swiss investment manager- Partners Group.
Even French oil major TOTAL S.A. TOT is diversifying into renewable energies with an agreement to buy 74.33% of Direct Energie - France's third-largest electricity supplier - forabout â¬1.4 billion. On completion of the deal, the companywill forward the offer to buy the remaining shares at the same price.
In 2017, Direct Energie purchased French renewables firm - Quadran. The installed capacity of 1.35 gigawattcomprised 550 megawatt of renewable and 2 gigawatt pipeline.
In another instance, BP plc BP acquired Tela Battery for its 25-megawatt wind farm in central South Dakota. Tesla battery will be installed at the ten-turbine Titan 1 project in the second half of 2018. Commissioned in 2009, Titan 1 comprises 10 2.5-megawatt Clipper turbines.
Future of Wind Power
During the 21st century, Royal Dutch Shell anticipates global energy demand to grow as the world's population will reach beyond 10 billion and becomes wealthier.
Per the company, wind power demand is estimated to witness a compound annual growth rate (CAGR) of 11.3% between 2020 and 2025. In particular, only hydrogen and solar PV are expected to grow by 29.7% and 20.3%, respectively. During 2025-2040, wind power is projected to grow by about 10%, before dawdling to about 5% in the subsequent 20 years.
The global demand for oil is expected to decline from 2025, while demand for gas is anticipated to deteriorate after 2030.
Though oil is a necessary component for the growth of any nation, climate change and related advances in other energy sources make it less important. Moreover, the emphasis to shift to renewable energy is likely to impact the companies, which are unwilling to transform operations. These changes may appear restrained, since they imply a distinct sh ift in an industry that has struggled with government's climate regulation for years. However, investor's concerns are high, which is likely to propeloil companies to focus on other renewable sources of energy.
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This article appears in: Investing , Business , Stocks Referenced Symbols: BP , TOT , RDS.A , EQNR Source: Google News Norway | Netizen 24 Norway