Posted on July 17, 2023
OSLO, July 13 (Reuters) – Global offshore wind firm Orsted (ORSTED.CO) chose to exit a landmark German seabed lease auction, its top executives said on Thursday, after the company expressed concerns about high prices.
Germany on Wednesday announced the results of the tender for 7 gigawatts (GW) of capacity in the auction, with oil majors BP (BP.L) and TotalEnergies (TTEF.PA) emerging as winners and agreeing to pay a record 12.6 billion euros ($13.96 billion) for the leases.
“Orsted very deliberately chose not to pay record high concession prices for new offshore projects in Germany,” chief executive Mads Nipper said in a post on the LinkedIn platform.
Earlier this year, Nipper had warned against the German pricing model for the auction, saying it could ultimately raise costs for consumers. The tender allowed bidders to compete on their willingness to pay the German government rather than receiving subsidies.
The Danish firm had submitted bids for some of the German sites together with partner BASF (BASFn.DE), Rasmus Errboe, Orsted’s head of Europe said in an emailed statement, but did not comment on the stage at which Orsted quit the process.
“We will see more offshore wind being tendered out across our core European markets in the coming years than ever before, and we will continue to pursue the right opportunities for us while adhering to our criteria for value creation,” Errboe added.
German utility EnBW (EBKG.DE) also took part in the bidding process in a consortium with Norwegian oil major Equinor (EQNR.OL), it said on Thursday, adding it had submitted an economic and competitive bid.
“The offshore market is currently very tense. Many companies want to secure renewable projects in view of their own expansion targets and transformation needs,” EnBW said.
EnBW, which has partnered with BP in previous offshore tenders, said the design of Germany’s tender meant that qualitative criteria were not important: “The only criterion for the area award is the bidders’ willingness to pay.”
Equinor confirmed it took part in the tender.
Germany will tender a further 1.8 GW of offshore wind under a different model for centrally pre-developed sites this summer, according to lobby group Wind Europe.
On Wednesday, Orsted also received development consent for its Hornsea 4 offshore wind farm project in the British North Sea.
Reporting by Nora Buli; Additional reporting by Christoph Steitz; Editing by Friederike Heine and Mark Potter.