BP Plc is beefing up its bid to develop wind projects off Scotland’s coast with the promise of creating hundreds of local jobs if it wins.
The pledge comes amid intense competition to develop wind power off Scotland’s coast and as the oil and gas giant continues a push to expand its offshore wind footprint in the U.K. and abroad. Partnered with German utility EnBW Energie Baden-Wuerttemberg AG, BP is among firms awaiting the results of the latest auction of British seabed rights.
If successful, the companies will build some 2.9 gigawatts of wind power capacity offshore Scotland, adding to another 3 gigawatts they are already developing in the Irish Sea. Crown Estate Scotland expects to announce the winners of the process in mid-January 2022.
BP says it expects to construct two vessels for crew transfers and two for offshore support, which it estimates will create about 500 local jobs. The ships will also be used to service its Mona and Morgan U.K. wind developments.
The promise to boost the local economy may be crucial for BP to win offshore development rights. The oil giant won a similar contest for a slice of the Irish Sea last year by far outbidding the competition. That strategy won’t work in Scotland, where there’s a cap on the bid price and it’s likely most of the bidders will offer the maximum payment. That leaves Crown Estate Scotland to make a more subjective determination on who the winners will be.
The banks of Glasgow’s river Clyde were once a shipbuilding hub but faced decline after the Second World War and have since struggled to recover. Now, other oil and gas majors, such as Royal Dutch Shell Plc and TotalEnergies SE, as well as wind giant Orsted AS, are all also competing for Scotland’s offshore acreage to tap its wind-power potential.
“We’re very excited, we’re very hopeful,” said Felipe Arbelaez, BP’s senior vice president for Net Zero Energy, in an interview from Glasgow.
Critics have questioned BP’s ability to transition into the offshore wind industry, pointing to the hefty premiums it paid for licenses in the Irish Sea and saying that green energy falls outside of its core competency.
Arbelaez disputes that premise, citing BP’s experience developing offshore oil and gas projects, its partnership with EnBW -- which operates offshore wind facilities in Germany -- and the more than 1,000 onshore turbines it operates in the U.S.
The London-based major recently filled over 100 offshore wind jobs after completing a hiring campaign, Arbelaez said. BP is also retraining engineers, geoscientists and other specialists internally.
“With the 3 gigawatts we have with Morgan and Mona, it does enable us to engage the supply chain early,” said Richard Haydock, vice president of offshore wind at BP. “There is clearly a benefit of scale.”
If BP wins the auction, it expects to apply for a contract-for-difference, a U.K. government mechanism used to guarantee fixed prices for offshore wind farms and make them more commercially attractive to developers. The firm is likely to bid for one starting in 2025 for its Irish Sea developments, and a year or two later in Scotland.
“We are looking at the contracts-for-difference round as one of the key parameters in terms of mark-to-market and price support,” says Arbelaez. “The actual strategy of how much we’ll bid” is something the company still hasn’t decided.