BP Share News (BP.)

* Auction was "highly contested race" - Bernstein
* RWE says price it was awarded was lowest in auction
* BP teams up with Germany's EnBW

(Adds source on pricing, quotes from BP's low carbon chief,
background on other big offshore wind markets)
By Susanna Twidale
LONDON, Feb 8 (Reuters) - RWE, BP and Total
were among winners in Britain's first major auction of
offshore wind farm leases in more than a decade, British
authorities said on Monday.
Countries across the globe are racing to build up green
power in order to slow global warming in line with the Paris
climate accord. Britain plans to generate a third of its
electricity from offshore wind by 2030 as part of its own
efforts to reach net zero carbon emissions by 2050.
It had the largest offshore wind market in the world with
around a third of all installed offshore wind capacity at the
end of 2020, followed by Germany with 24% and China with 23%,
according to analysts at Rystad.
A total of six projects, representing just under 8 gigawatts
(GW) of capacity, were successful in the auction. If built, they
could provide enough electricity to power about 7 million homes,
said the Crown Estate, which is responsible for waters around
England and Wales.
BP, in its first move into Britain's offshore wind market,
won two sites representing a total of 3 GW jointly with German
regional utility EnBW, paying more than bidders for
other areas in what Bernstein analysts called a "highly
contested race".
A source at Royal Dutch Shell, which places less
importance than BP on owning renewables power infrastructure,
said it had taken part in the round, but added its offer was
“nowhere close” to BP’s.
"These are highly advanced assets… it's location, location,
location,” BP's low carbon energy chief Dev Sanyal told Reuters,
pointing to the lease's shallow water 30 km from the coast,
which will lower transmission costs and reduce the environmental
impact.
Sanyal expected a final investment decision (FID) on the
windfarms to be taken in 2025, but said it was too early to say
how much the development would cost. BP and EnBW will each pay
around £1 billion ($1.37 billion) in fees for the project before
the FID, in four annual payments of £231 million for each of the
two leases.
BP aims to ramp up renewable power generation to 50 GW by
2030 from 3.3 GW now at returns of 8-10%, while slashing oil
output.
A source at another major that took part in the auction said
they had calculated a lower rate of return, saying BP's price
and volatility expectations were "radically higher".
RWE, Germany's largest power producer and Europe's
third-largest renewables firm after Iberdrola and Enel
, was confirmed as preferred bidder for two sites with
total potential capacity of 3 GW.
The average price RWE was awarded to lease seabed was 82,552
pounds per megawatt (MW) per year, the lowest awarded price
during the auction, the company said.
A venture of French oil major Total and
Macquarie's Green Investment Group secured the rights
to a 1.5 GW project off Britain's East Anglian coast.
Offshore Wind Limited, a venture of Cobra Instalaciones y
Servicios and Flotation Energy, secured a 480 MW site.
Crown Estate Scotland carries out separate auctions for the
waters around the Scottish coast.
Below is a table of the winning bids
Proposed Successful bidder Option Fee Option Fee
Project deposit Bid/£/MW/a
Capacity (£/excl VAT) nnum)
(MW)
1,500 RWE Renewables 114,304,500 76,203
1,500 RWE Renewables 133,350,000 88,900
1,500 Green Investment Group 124,573,500 83,049
1,500 Consortium of EnBW and 231,000,000 154,000
BP
480 Offshore Wind Limited 44,751,840 93,233
1,500 Consortium of EnBW BP 231,000,000 154,000
($1 = 0.7294 pounds)



($1 = 0.7307 pounds)

(Reporting by Susanna Twidale in London, additional reporting
by Christoph Steitz in Frankfurt and Ron Bousso; Editing by
Edmund Blair and Susan Fenton and Kirsten Donovan)