BP plans to build two offshore wind farms in the Irish Sea without seeking government subsidies, according to The Times. If successful, this would be the first time subsidy-free offshore wind projects have been developed. The energy giant intends to circumvent the UK government’s contracts for difference (CfD) process, which guarantees fixed income for a certain period of time. BP CEO Bernard Looney said the company’s strategy is to use the electricity generated for its own operations due to high demand in the UK. Construction could start as early as next year.
This move by BP is particularly noteworthy given the current challenges facing the offshore wind industry. The costs of offshore wind projects have risen significantly in recent months, causing some developers to reassess their investments. Swedish utility Vattenfall recently announced that it would halt development of a major offshore wind project in the UK due to rising costs and difficult market conditions. Vattenfall cited a 40% increase in cost as one of the reasons for his decision.
While the demand for clean energy is higher than ever, the offshore wind sector faces significant obstacles. Rising inflation and capital costs have hit the industry, and geopolitical tensions have made the supply chain especially vulnerable. BP’s decision to pursue subsidy-free offshore wind farms is a bold move that demonstrates its commitment to diversifying its energy portfolio.
