High costs and low profitability of projects means that Statoil should reconsider its commitment to wind power, experts say.
«The company is on the right track when it wants to focus strongly on the upstream petroleum industry, where it has its core competencies. The company now has so much to do that it is time to implement it consistently. Wind power seems to require too many resources in terms of return, and making oneself dependent on large subsidies is always risky,» oil analyst Hans Henrik Ramm tells publication Teknisk Ukeblad.
According to TU, the UK’s Sheringham Shoal wind power facility will not be profitable until well into the next decade.
Statoil wants an annual income of NOK 500 million (about GBP 54.6 million) a year from the project. Statoil has invested NOK 5 billion (roughly GBP 546.1 million) in the project and must also reckon with maintenance expenditures
«High wear and tear and frequent replacement can could make maintenance costs skyrocket,» says Øystein Noreng, professor in petroleum economics at the Norwegian Business School (BI), to TU.
Statoil and Statkraft are also planning a major new wind power project in the UK. At a cost of NOK 100 billion (approximately GBP 10.9 billion), Dogger Bank will consume considerable resources.
Press spokesperson Morten Eek at Statoil explains to TU that renewable projects are subject to the same conditions as oil and gas projects and must meet the same requirements regarding profitability.
Little faith in Dogger
TU further write that they have spoken with analysts who believe the return on wind power projects is significantly lower than for other projects in the company.
«Earnings depend on subsidies from the British government. This implies a political risk. It is an open question how long authorities in countries with weak economies will continue to support costly energy. The Dogger Bank project is hardly profitable with a required return of 15 percent,» declares Professor Øystein Noreng.
Oil analyst Hans Henrik Ramm also believes that the Dogger Bank project’s future is not ready.
«The Brits are even trying to shift focus from wind to gas. The current subsidy scheme is being phased out and is planned replaced with a system that is technology neutral,» he says.
Statoil’s official line is continued investment in wind power.
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