Total acquires 51% stake in £3bn North Sea wind project
French group’s purchase from UK utility SSE marks its first big move into offshore sector
Total is to acquire a majority stake in a £3bn North Sea renewable energy project from UK utility SSE, marking the French oil major’s first significant move into offshore wind.
For the 51 per cent share in what will be Scotland’s biggest offshore wind farm, Total on Wednesday said it would pay £70m upfront when the deal closes and £60m from earnings to the seller, subject to performance.
Total will fund its share of capital investment in the Seagreen 1 project, at just over £1.5bn, mostly using debt.
The move is the latest sign of traditional oil majors pursuing large-scale renewable energy projects as they seek to persuade investors and environmental activists they are serious about cutting their emissions footprint.
Companies including Total, Norway’s Equinor, Royal Dutch Shell and Spain’s Repsol have in recent years invested heavily along the electricity supply chain, from power generation to electric car charging points.
Total last month pledged to achieve net-zero emissions across its operations and products in Europe by 2050, while its peers have announced similar ambitions. But they still plan to allocate the bulk of spending to fossil fuel production.
The UK is the world’s biggest offshore wind market, with 37 projects representing a total of 8.5 gigawatts in operation, enough to power more than 7.5m homes. A further 3.8GW is under construction and 10.9GW has received planning consent, according to RenewableUK, a trade body.
Equinor is also building a sizeable footprint in offshore wind. Last year it won contracts, along with SSE, that allow it to build what will be the world's biggest offshore wind development, in the Dogger Bank region of the North Sea off the north-east coast of England.
The market has become increasingly competitive in recent years as oil and gas majors competed with traditional utilities for UK government contracts that promise a minimum price per unit of electricity produced.
At the latest big auction of government contracts last year, successful developers agreed to build projects for guaranteed prices at £39.65 per megawatt hour, a 30 per cent reduction on prices in an auction in 2017.