Wind Fuels the North Sea’s Next Energy Boom

As oil declines, huge wind farms are providing electricity to Northern Europe.

For many years the capital of the United Kingdom’s offshore oil and gas industry, Aberdeen, Scotland, is in the midst of an energy transition that is transforming the North Sea from a fossil-fuel basin into the world’s center of offshore wind power.

With oil prices down to around $50 a barrel, as many as 50 North Sea oil and gas fields could be shut down this year, according to industry consultant Wood Mackenzie.  Even if crude rebounds to $85 a barrel, oil companies are likely to abandon 140 North Sea fields over the next five years, the company says.

That contrasts sharply with the building boom in offshore wind turbines.  Europe added a record three gigawatts of new offshore wind capacity in 2015, most of that in the North Sea. About 3,000 offshore turbines, totaling about 10 gigawatts of installed capacity, are operating there already.  Annual additions are expected to average four gigawatts through 2030, bringing wind power to more than 60 gigawatts of capacity.  In terms of output, offshore wind power accounts for about 1.5 percent of Europe’s total electricity generation today.  That figure will rise to 7 percent by 2030, according to WindEurope, a Brussels-based industry association.
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Offshore wind is booming despite the fact that electricity demand in Europe is flat and even declining in some countries.  In Germany and the U.K., renewable energy is expanding more rapidly than aging fossil-fuel plants are being shut down (see Germany Runs Up Against the Limits of Renewables).  The resulting overcapacity has slashed the wholesale price of electricity, from about 60 euros ($68) per megawatt-hour three years ago to around 30 euros ($34) today.  The cost of energy from offshore wind turbines is more than 100 euros ($114) a megawatt-hour.  Power from onshore wind farms costs much less—60 ($68) to 70 euros per megawatt-hour—but new onshore installations have been blocked, largely because of objections from local communities.

“There is no logical business case [for offshore wind] without the politics,” says David Reiner, assistant director of the Energy Policy Research Group at the University of Cambridge, “and that’s the only rationale as to why we’re willing to pay so much more for offshore rather than onshore.”

That means these mammoth wind farms are essentially being financed by governments.

Read more at Wind Fuels the North Sea’s Next Energy Boom