Green Energy Giants to Invest $16 Billion in Offshore Wind and Hydrogen

By Tsvetana Paraskova - Dec 05, 2023

Spain’s Iberdrola and the UAE’s Masdar agreed on Tuesday to form a strategic partnership looking to invest $16.2 billion (15 billion euros) in offshore wind and hydrogen in major markets including the U.S., the UK, and Germany.

Iberdrola, a utility giant with 41 gigawatts (GW) of renewables in operation, and the UAE’s clean energy developer Masdar will look to jointly invest in the 1.4-GW UK East Anglia 3 offshore wind project. This deal has been under negotiation for the last few months and could be signed by the end of the first half of 2024. Masdar’s stake in this wind farm could be 49%, Iberdrola said.

“Beyond the East Anglia 3 transaction, both companies will work together to jointly invest in future offshore wind and green hydrogen projects in Europe and other markets,” Iberdrola noted.

Iberdrola and Masdar agreed in July 2023 to co-invest in the Baltic Sea wind farm offshore Germany.

“We are very pleased to be expanding our existing alliance with a leading long-term partner like Masdar from Germany, where we are already constructing new offshore wind turbines, to the UK and across the world,”  Iberdrola’s executive chairman Ignacio Galán said.

The agreement with Masdar was announced at the COP28 climate summit, at which 118 governments pledged to triple global renewable energy capacity to at least 11,000 gigawatts by 2030.

Last month, UK’s Octopus Energy said it was launching a $3.7-billion (£3 billion) offshore wind fund in cooperation with Japan’s Tokyo Gas as part of an ambition to invest in projects in Europe to reduce fossil fuel reliance and boost energy security.

Earlier this year, Octopus Energy said it plans to lead investments worth $18.6 billion (£15 billion) into offshore wind power projects globally by 2030. Octopus Energy said its plans “to unleash” the investments into offshore wind would go towards the generation of 12 GW of renewable electricity a year, enough to power 10 million homes.

BP Spuds Production Well at $6-Billion Azerbaijan Oilfield

By Tsvetana Paraskova - Dec 05, 2023

BP has started drilling the first production well from a new platform developing the next $6-billion stage of a giant field in the Caspian Sea in Azerbaijan, the UK oil and gas supermajor said on Tuesday.

As operator of the Azeri-Chirag-Deepwater Gunashli (ACG) field development, BP announced that the first production well was spudded from the new Azeri Central East (ACE) platform, following the safe completion of all offshore hook-up, installation, and commissioning of the ACE topsides unit which sailed away from the Bayil fabrication yard in August 2023.

The well is planned to reach a total depth of up to 3,188 meters (10,459 ft), which is expected to take around three months.

“We are excited to commence drilling the first platform production well on ACE. This allows us to meet our first oil production target for ACE and deliver it in early 2024,” said Gary Jones, BP’s regional president for Azerbaijan, Georgia, and Turkey. 

“We look forward to delivering this first ACE production well safely, efficiently and on schedule.”

The $6 billion ACE project is the next stage of development of the giant ACG field in the Caspian Sea. The Azeri-Chirag-Deepwater Gunashli (ACG) field is located about 100 kilometers (62 miles) east of Baku and is the largest oilfield in the Azerbaijan sector of the Caspian basin.

The new platform and facilities are designed to process up to 100,000 barrels of oil per day (bpd) and the project is expected to produce up to 300 million barrels over its lifetime, BP said.

The new project was sanctioned in April 2019 and was the first major investment decision by the ACG partnership following the extension of the ACG Production Sharing Agreement (PSA) to 2049, agreed in 2017. Around $42 billion has been invested in the development of the ACG area since the original PSA was signed in 1994, according to the UK supermajor.   

Governments Are Paying Up to Restore Confidence in Offshore Wind

By Tsvetana Paraskova - Dec 05, 2023

After a year of struggles for offshore wind developments amid rising costs, canceled projects, and failed auctions, governments and policymakers in Europe and the U.S. have realized they may need to pay up to ensure projects are built to help their decarbonization goals.

Europe and the United States risk missing their ambitious wind power installation targets as soaring costs, supply chain delays, and low electricity prices at auctions hamper development and lead to a cancelation of offshore wind projects.   

The offshore wind industry has seen several major setbacks since the summer—auctions in the U.S. and the UK were a flop and a large UK project was canceled due to surging costs and challenging market conditions pressuring new developments. Meanwhile, developers in the U.S. are seeking looser requirements for tax credits to make projects economically feasible.

But now some governments, including the UK government, have raised the minimum prices for next year’s auctions to ensure there will be bidders to develop offshore wind projects.

“The reality is governments are starting to react and are accepting that to keep their offshore wind programmes on track - which are important for the economy, energy security, decarbonisation targets and jobs - it’s worth paying a bit more,” Jonathan Cole, chief executive of project developer Corio Generation, told Reuters.

In the UK, the government last month raised the maximum price for offshore wind projects in its flagship renewables scheme, the Contracts for Difference (CfD) auction.

“Following an extensive review of the latest evidence, including the impact of global events on supply chains, the government has raised the maximum price offshore wind and other renewables projects can receive in the next Contracts for Difference (CfD) auction to ensure it is performing effectively,” the UK said.

In a bid to keep Europe competitive in the wind power industry, the European Commission unveiled last month the so-called European Wind Power Action Plan, “to ensure that the clean energy transition goes hand-in-hand with industrial competitiveness and that wind power continues to be a European success story.”

By Tsvetana Paraskova for Oilprice.com

 

Insurance Risk Premium Increases After Houthi Strikes On Ships

By Charles Kennedy - Dec 04, 2023

In the aftermath of new attacks by Houthi missiles on commercial vessels in the Red Sea, war risk insurance premiums have risen for this trade route. 

"It has now become clear the Houthis will attack anything at sea with links to Israel or Israelis, regardless of how feeble the links may be, and regardless of the potential for collateral damage to non-Israelis, for example crew members," Jakob Larsen, head of maritime safety & security with BIMCO, told Reuters. On Sunday, Yemen’s Houthis attacked three ships off the Red Sea coast of Yemen with ballistic missiles, while a U.S. warship shot down three Houthi drones

“These attacks represent a direct threat to international commerce and maritime security,” the U.S. military’s Central Command said in a statement. “They have jeopardized the lives of international crews representing multiple countries around the world.”

Last month, the Houthis seized a cargo ship linked to an Israeli businessman, sparking speculation that more such attacks will follow against Israeli-owned vessels. A second hijacking took place shortly after, but was determined to have been Somali pirates taking advantage of the chaos in the Red Sea in the wake of the Hamas attack on Israel on October 7, and Israel’s aggressive response in Gaza. Sunday’s attacks were claimed by the Houthis who claimed the vessels were linked to Israel, though U.S. Central Command said the three vessels were connected to 14 nations and not to Israel.

Following the Sunday attacks, an Israel military spokesman cited by Reuters said, “there is little a merchant ship can do to protect itself against weapons of war. Rerouting away from the area is a valid consideration, especially for ships at heightened risk.” 

Insurance risk premiums have risen as of Monday from around 0.03% prior to Red Sea attacks last week to between 0.05%-0.10% of the value of a ship, according to Reuters. The heightened risk means that commercial vessels will be forced to pay higher insurance or to use longer routes, which can increase transportation costs by tens of thousands of dollars. 

By Charles Kennedy for Oilprice.com

Africa's Hydropower Plants Could Receive $1 Billion for Upgrades

By Charles Kennedy - Dec 04, 2023

A dozen hydropower plants across Africa could receive $1 billion from the African Development Bank (AfDB) to upgrade equipment and boost power generation and potentially speed up the transition from fossil fuels, an official AfDB told Reuters on Monday.

Twelve projects in South Africa, Nigeria, Sudan, Zambia, Angola, and the Democratic Republic of Congo are expected to benefit from the funding.

The upgrades to the hydropower plants are set to “accelerate the energy transition” away from fossil fuels, according to João Cunha, head of the renewable energy division at AfDB.

This summer, the AfDB-managed Sustainable Energy Fund for Africa (SEFA) said at the Africa Energy Forum that hydropower could be a key element in meeting the accelerating demand for renewable energy.

A report from the bank in collaboration with the International Hydropower Association (IHA) found in July that out of the 87 hydropower stations in Africa screened, 21 are in high need, and 36 are in medium need of refurbishment. This represents an installed capacity of 4.6 GW and 10 GW, respectively, for modernization.

“To address these modernisation needs, SEFA prioritises providing technical and financial support to these projects while coordinating closely with partner institutions for additional support,” AfDB said earlier this year.

“Modernising existing hydropower assets are accelerator for Africa’s energy transition and it increases the availability of dispatchable renewable energy in a relatively short period of time while providing opportunities for integrating variable renewable energy sources, such as floating solar,” said Daniel Schroth, African Development Bank Director for Renewable Energy and Energy Efficiency.

“Hydropower modernisation is not just about upgrading infrastructure — it's about decarbonising and enhancing the flexibility and resilience of power systems, critical ingredients for a successful energy transition,” Cunha said in July

At the COP28 climate summit on Sunday, multilateral development banks attending the conference affirmed their commitment to a concerted, global action, including increasing co-financing and private sector engagement to address climate change, felt acutely in Africa.

By Charles Kennedy for Oilprice.com

Rockefeller Foundation Backs Coal Phase-Out via Carbon Credits

By Tsvetana Paraskova - Dec 04, 2023

The Rockefeller Foundation is backing the world’s first coal-to-clean pilot project in the Philippines that will use carbon credits to enable early decommissioning of a coal-fired power plant.  

The Coal to Clean Credit Initiative (CCCI), which has support from The Rockefeller Foundation, announced on Monday at the COP28 climate summit a new collaboration with ACEN Corporation to explore a pilot project in the Philippines that would use carbon finance to phase out a coal-fired power plant and replace it with renewable energy.  

“This first-of-its-kind project will seek to inform plans for the CCCI to help phase out coal plants around the globe in line with the Paris Agreement,” The Rockefeller Foundation said in a statement.

The Rockefeller Foundation, set up by John D. Rockefeller in 1913, said back in 2020 that it had decided to divest from fossil fuels and not make any new investment in the industry. 

The Rockefeller Foundation has already launched programs aimed at lowering the use of coal-fired power in Asia and speeding up the deployment of battery storage for renewable energy. 

Commenting on the pilot project for an early retirement of a coal plant in the Philippines, Rajiv J. Shah, President of the Rockefeller Foundation, said “To retire coal plants, avoid those emissions, and create jobs, we need to create the right incentives for asset owners and communities and mobilize additional finance.”

“This innovative CCCI agreement will pilot a coal-to-clean credit methodology in the Philippines, one critical step toward breaking that overreliance and building a better future,” Shah added.

Developing countries in Asia and Africa say they would be eager to phase down – and ultimately phase out – coal if they had the necessary climate funding from the wealthy nations. But the climate funds pledged so far have been in the form of loans, which further burdens developing nations.

Indonesia and South Africa have recently backtracked on some of their coal reduction commitments, The Wall Street Journal reports.

By Tsvetana Paraskova for Oilprice.com

WORKERS CAPITAL

Dutch Fund Keeps Shell, BP in Portfolio as it Dumps 40 Other Oil Firms

By Tom Kool - Dec 01, 2023

Dutch pension fund Pensioenfonds Metaal & Techniek (PMT) is divesting from 40 oil and gas companies, but will keep its investments in Shell and BP and seven other energy firms as it sees the nine companies as “the most promising” for PMT in the sector.

PMT will continue to invest in Aker BP, BP, Enbridge, Eni, Equinor, Galp Energia, Neste Oyj, OMV, and Shell as it “bid goodbye” to 40 other oil and gas firms, the pension fund said on Friday.

Those nine companies meet PMT’s requirements—to have publicly stated an ambition to achieve net-zero emissions by 2050 and unveil substantiated action plans to cut emissions, the fund said.

“PMT is confident in continuing constructive engagement with these companies towards a 1.5 degree world,” it said.

“We think it is important that multinationals like Shell, despite moving slowly through the energy transition for now, are part of the solution,” Hartwig Liersch, PMT’s director of investments, said in a statement. 

Climate change is the single largest motivation of investment institutions to decide to exclude companies from their portfolios, a newly launched ‘exclusion tracker’ showed earlier this year.

Investors have become increasingly wary of investing in ‘sin industries’, which for many now include fossil fuel companies alongside the weapons and tobacco sectors.

Pension funds and other institutional investors in Europe have excluded some major oil and gas companies from their portfolios, while some European banks have scaled back financing for fossil fuel projects.

Not all investors are dumping fossil fuels—some believe that owning stocks could help them influence decisions at oil and gas firms regarding emissions reductions. Not all banks are ditching financing for oil and gas, either.

Yet, many investors have excluded stocks of oil and gas companies in recent years due to concerns about the impact the business of fossil fuels has on climate.