How attractive is wind investment in the G20?

This week, law firm Ashurst has published a report, ‘Powering Change’, which shares the views of 2,090 executives in the G20 about the energy transition.

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Richard Heap
May 13, 2020
How attractive is wind investment in the G20?

This week, law firm Ashurst has published a report, ‘Powering Change’, which shares the views of 2,090 executives in the G20 about the energy transition.

The respondents are responsible for taking the energy investment decisions in their businesses, with average turnover of $15bn and total turnover of $30trn.

And among their views on the energy transition, there are interesting talking points for the wind sector in particular.

For example, the report highlights the growing attraction of offshore wind, including in regions that don’t currently have an active offshore wind industry, and how it could be more attractive than onshore wind in the coming years.

What does the research show?

There is broad agreement from respondents about the need to invest in the energy transition.

In total, 82% said they were under extreme or significant pressure to do so, with 87% citing extreme or significant government pressure.

This is forcing firms to act. Eighty-six percent of those from large businesses – with over $50m turnover and 250 employees – said the energy transition will be key to strategic growth. The figure for those at smaller companies was 71%.

But respondents also identified a series of barriers to investment, including technical risk, lack of government support and high transactional costs.

The second of those is the most intriguing.

How can governments be the greatest source of pressure for the companies polled and also the second-largest barrier to investment? Well, the report’s authors have a theory. The 87% doesn’t just show that businesses are under pressure from central governments, but rather from every level: from cities, states and opposition parties, reflecting public sentiment.

The respondents in Germany, Japan and the UK ranked the lack of commercial incentives as a key barrier for companies seeking to invest in energy transition technologies. This shows that political will is still important to spur investment in renewables and decarbonisation.

What does this mean for wind?

Wind ranked alongside solar and hydro as the most popular three technologies for companies that have already invested in renewables, or committed to. This is an indication of the relative maturity of these sectors, and steep price drops.

However, onshore wind may not stay in this elite trio in the next five years.

The research also polled respondents on the technologies in which they hadn’t invested yet. When considering technologies that businesses had invested in or would consider in the next five years, onshore wind slipped behind biomass, geothermal and offshore wind.

There are a few reasons we think this might be the case.

The first is that the industry is facing financial headwinds, as countries including China, Germany and India have moved to competitive auctions.

It may also reflect the fact that increasing amounts of onshore wind can spark greater local opposition, which businesses don’t want to be associated with.

And finally, the onshore wind sector is only an attractive investment for firms in regions with the right wind conditions. Compared to the other technologies in the study, interest in onshore wind in the G20 was low – which the authors said was lower than they had anticipated.

But there were strong pockets of interest. Latin American countries Argentina, Brazil and Mexico; Asian nations China, India and Japan; and European nations France and Germany all showed great interest in onshore wind.

The other big trend was the emergence of offshore wind.

Now, we would expect to see interest from respondents in Asia and western Europe, where projects are operational, and the research suggests that Asia in particular is poised for an offshore wind boom.

Yet the research also showed great interest in offshore wind from countries without a developed offshore wind sector. Forty-four percent of respondents polled in India are keen to invest in offshore wind, followed by Argentina (40%) and Brazil (34%). This should hearten offshore wind firms with global plans.

And one-third (33%) of those questioned in North America said they had invested in or committed to invest in offshore wind too. That is a strong level of industry support given that there is still only one US offshore wind project totalling 30MW operational.

The big caveat with all of this is that research was carried about before the Covid-19 crisis. But if the energy transition pressures on business translate into investment in wind, we can see reasons for wind to remain positive.

NEWS IN BRIEF

SIEMENS TO SPIN OUT WIND INTO €2BN COMPANY

Siemens is poised to spin out its wind operations into a separate company with mechanical drive systems manufacturer Flender. The combined company will have annual revenue of around €2bn. Siemens then plans to publicly list the new company. Read more

SCOTTISH POWER BUYS 165MW LOCAL PAIR

Iberdrola subsidiary Scottish Power has agreed to buy two onshore wind projects totalling 165MW in Scotland from 3R Energy and Mitchell Energy. It is set to build the pair and repower its nearby 55MW Hagshaw Hill to form a 220MW wind cluster. Read more

ENBRIDGE SELLS SAINT NAZAIRE STAKE TO CPPIB

Enbridge has agreed to sell a 24.5% stake in the planned 480MW Saint Nazaire offshore wind farm in France to Canada Pension Plan Investment Board for €200m. This represents just less than half (49%) of the 50% stake that Enbridge owns in the development. Read more

AEP WINS 810MW SUPPORT IN OKLAHOMA

American Electric Power subsidiary SWEPCO has won Arkansas regulator support to add wind capacity totalling 810MW in Oklahoma. This capacity is made up of stakes in three projects totalling almost 1.5GW. Read more

50HERTZ PARENT CLOSES €750M BOND ISSUE

50Hertz Transmission's parent company Eurogrid has secured €750m liquidity through a 12-year green bond issue. It plans to use these proceeds to finance the development of the 1.5GW Ostwind 1 and 2 offshore links. Read more

GIG TEAMS UP WITH RIDG IN SCOTTISH ROUND

Macquarie's Green Investment Group has teamed up with Scottish developer RIDG to compete in the next leasing round for seabed land off the coast of Scotland, which the The Crown Estate Scotland is due to launch soon.

ACWA AND SILK ROAD TEAM UP ON RENEWABLES

Saudi Arabian developer ACWA Power has brought in China's Silk Road Fund as a partner and 49% shareholder in renewables arm ACWA Power RenewCo, which owns solar and wind assets of 1.7GW in MENA. Read more

MAINSTREAM TO BUILD 630MW CHILE LINK

Mainstream Renewable Power has started building 126.8km transmission lines to connect its 630MW Huemel wind and solar portfolio to the grid in Chile. This is part of Mainstream's 1.3GW Andes Renovables platform. Read more

IDEOL TEAMS UP WITH KEROGEN ON FLOATERS

French developer Ideol has teamed up with private equity house Kerogen to work on a project to pair floating wind with oil and gas platforms. Read more

AVANGRID STARTS ON 306MW IN NEW MEXICO

Avangrid has started building the 111-turbine 306MW La Joya wind farm in New Mexico, which is due to complete by the end of 2020. Read more

This week, law firm Ashurst has published a report, ‘Powering Change’, which shares the views of 2,090 executives in the G20 about the energy transition.

The respondents are responsible for taking the energy investment decisions in their businesses, with average turnover of $15bn and total turnover of $30trn.

And among their views on the energy transition, there are interesting talking points for the wind sector in particular.

For example, the report highlights the growing attraction of offshore wind, including in regions that don’t currently have an active offshore wind industry, and how it could be more attractive than onshore wind in the coming years.

What does the research show?

There is broad agreement from respondents about the need to invest in the energy transition.

In total, 82% said they were under extreme or significant pressure to do so, with 87% citing extreme or significant government pressure.

This is forcing firms to act. Eighty-six percent of those from large businesses – with over $50m turnover and 250 employees – said the energy transition will be key to strategic growth. The figure for those at smaller companies was 71%.

But respondents also identified a series of barriers to investment, including technical risk, lack of government support and high transactional costs.

The second of those is the most intriguing.

How can governments be the greatest source of pressure for the companies polled and also the second-largest barrier to investment? Well, the report’s authors have a theory. The 87% doesn’t just show that businesses are under pressure from central governments, but rather from every level: from cities, states and opposition parties, reflecting public sentiment.

The respondents in Germany, Japan and the UK ranked the lack of commercial incentives as a key barrier for companies seeking to invest in energy transition technologies. This shows that political will is still important to spur investment in renewables and decarbonisation.

What does this mean for wind?

Wind ranked alongside solar and hydro as the most popular three technologies for companies that have already invested in renewables, or committed to. This is an indication of the relative maturity of these sectors, and steep price drops.

However, onshore wind may not stay in this elite trio in the next five years.

The research also polled respondents on the technologies in which they hadn’t invested yet. When considering technologies that businesses had invested in or would consider in the next five years, onshore wind slipped behind biomass, geothermal and offshore wind.

There are a few reasons we think this might be the case.

The first is that the industry is facing financial headwinds, as countries including China, Germany and India have moved to competitive auctions.

It may also reflect the fact that increasing amounts of onshore wind can spark greater local opposition, which businesses don’t want to be associated with.

And finally, the onshore wind sector is only an attractive investment for firms in regions with the right wind conditions. Compared to the other technologies in the study, interest in onshore wind in the G20 was low – which the authors said was lower than they had anticipated.

But there were strong pockets of interest. Latin American countries Argentina, Brazil and Mexico; Asian nations China, India and Japan; and European nations France and Germany all showed great interest in onshore wind.

The other big trend was the emergence of offshore wind.

Now, we would expect to see interest from respondents in Asia and western Europe, where projects are operational, and the research suggests that Asia in particular is poised for an offshore wind boom.

Yet the research also showed great interest in offshore wind from countries without a developed offshore wind sector. Forty-four percent of respondents polled in India are keen to invest in offshore wind, followed by Argentina (40%) and Brazil (34%). This should hearten offshore wind firms with global plans.

And one-third (33%) of those questioned in North America said they had invested in or committed to invest in offshore wind too. That is a strong level of industry support given that there is still only one US offshore wind project totalling 30MW operational.

The big caveat with all of this is that research was carried about before the Covid-19 crisis. But if the energy transition pressures on business translate into investment in wind, we can see reasons for wind to remain positive.

NEWS IN BRIEF

SIEMENS TO SPIN OUT WIND INTO €2BN COMPANY

Siemens is poised to spin out its wind operations into a separate company with mechanical drive systems manufacturer Flender. The combined company will have annual revenue of around €2bn. Siemens then plans to publicly list the new company. Read more

SCOTTISH POWER BUYS 165MW LOCAL PAIR

Iberdrola subsidiary Scottish Power has agreed to buy two onshore wind projects totalling 165MW in Scotland from 3R Energy and Mitchell Energy. It is set to build the pair and repower its nearby 55MW Hagshaw Hill to form a 220MW wind cluster. Read more

ENBRIDGE SELLS SAINT NAZAIRE STAKE TO CPPIB

Enbridge has agreed to sell a 24.5% stake in the planned 480MW Saint Nazaire offshore wind farm in France to Canada Pension Plan Investment Board for €200m. This represents just less than half (49%) of the 50% stake that Enbridge owns in the development. Read more

AEP WINS 810MW SUPPORT IN OKLAHOMA

American Electric Power subsidiary SWEPCO has won Arkansas regulator support to add wind capacity totalling 810MW in Oklahoma. This capacity is made up of stakes in three projects totalling almost 1.5GW. Read more

50HERTZ PARENT CLOSES €750M BOND ISSUE

50Hertz Transmission's parent company Eurogrid has secured €750m liquidity through a 12-year green bond issue. It plans to use these proceeds to finance the development of the 1.5GW Ostwind 1 and 2 offshore links. Read more

GIG TEAMS UP WITH RIDG IN SCOTTISH ROUND

Macquarie's Green Investment Group has teamed up with Scottish developer RIDG to compete in the next leasing round for seabed land off the coast of Scotland, which the The Crown Estate Scotland is due to launch soon.

ACWA AND SILK ROAD TEAM UP ON RENEWABLES

Saudi Arabian developer ACWA Power has brought in China's Silk Road Fund as a partner and 49% shareholder in renewables arm ACWA Power RenewCo, which owns solar and wind assets of 1.7GW in MENA. Read more

MAINSTREAM TO BUILD 630MW CHILE LINK

Mainstream Renewable Power has started building 126.8km transmission lines to connect its 630MW Huemel wind and solar portfolio to the grid in Chile. This is part of Mainstream's 1.3GW Andes Renovables platform. Read more

IDEOL TEAMS UP WITH KEROGEN ON FLOATERS

French developer Ideol has teamed up with private equity house Kerogen to work on a project to pair floating wind with oil and gas platforms. Read more

AVANGRID STARTS ON 306MW IN NEW MEXICO

Avangrid has started building the 111-turbine 306MW La Joya wind farm in New Mexico, which is due to complete by the end of 2020. Read more

This week, law firm Ashurst has published a report, ‘Powering Change’, which shares the views of 2,090 executives in the G20 about the energy transition.

The respondents are responsible for taking the energy investment decisions in their businesses, with average turnover of $15bn and total turnover of $30trn.

And among their views on the energy transition, there are interesting talking points for the wind sector in particular.

For example, the report highlights the growing attraction of offshore wind, including in regions that don’t currently have an active offshore wind industry, and how it could be more attractive than onshore wind in the coming years.

What does the research show?

There is broad agreement from respondents about the need to invest in the energy transition.

In total, 82% said they were under extreme or significant pressure to do so, with 87% citing extreme or significant government pressure.

This is forcing firms to act. Eighty-six percent of those from large businesses – with over $50m turnover and 250 employees – said the energy transition will be key to strategic growth. The figure for those at smaller companies was 71%.

But respondents also identified a series of barriers to investment, including technical risk, lack of government support and high transactional costs.

The second of those is the most intriguing.

How can governments be the greatest source of pressure for the companies polled and also the second-largest barrier to investment? Well, the report’s authors have a theory. The 87% doesn’t just show that businesses are under pressure from central governments, but rather from every level: from cities, states and opposition parties, reflecting public sentiment.

The respondents in Germany, Japan and the UK ranked the lack of commercial incentives as a key barrier for companies seeking to invest in energy transition technologies. This shows that political will is still important to spur investment in renewables and decarbonisation.

What does this mean for wind?

Wind ranked alongside solar and hydro as the most popular three technologies for companies that have already invested in renewables, or committed to. This is an indication of the relative maturity of these sectors, and steep price drops.

However, onshore wind may not stay in this elite trio in the next five years.

The research also polled respondents on the technologies in which they hadn’t invested yet. When considering technologies that businesses had invested in or would consider in the next five years, onshore wind slipped behind biomass, geothermal and offshore wind.

There are a few reasons we think this might be the case.

The first is that the industry is facing financial headwinds, as countries including China, Germany and India have moved to competitive auctions.

It may also reflect the fact that increasing amounts of onshore wind can spark greater local opposition, which businesses don’t want to be associated with.

And finally, the onshore wind sector is only an attractive investment for firms in regions with the right wind conditions. Compared to the other technologies in the study, interest in onshore wind in the G20 was low – which the authors said was lower than they had anticipated.

But there were strong pockets of interest. Latin American countries Argentina, Brazil and Mexico; Asian nations China, India and Japan; and European nations France and Germany all showed great interest in onshore wind.

The other big trend was the emergence of offshore wind.

Now, we would expect to see interest from respondents in Asia and western Europe, where projects are operational, and the research suggests that Asia in particular is poised for an offshore wind boom.

Yet the research also showed great interest in offshore wind from countries without a developed offshore wind sector. Forty-four percent of respondents polled in India are keen to invest in offshore wind, followed by Argentina (40%) and Brazil (34%). This should hearten offshore wind firms with global plans.

And one-third (33%) of those questioned in North America said they had invested in or committed to invest in offshore wind too. That is a strong level of industry support given that there is still only one US offshore wind project totalling 30MW operational.

The big caveat with all of this is that research was carried about before the Covid-19 crisis. But if the energy transition pressures on business translate into investment in wind, we can see reasons for wind to remain positive.

NEWS IN BRIEF

SIEMENS TO SPIN OUT WIND INTO €2BN COMPANY

Siemens is poised to spin out its wind operations into a separate company with mechanical drive systems manufacturer Flender. The combined company will have annual revenue of around €2bn. Siemens then plans to publicly list the new company. Read more

SCOTTISH POWER BUYS 165MW LOCAL PAIR

Iberdrola subsidiary Scottish Power has agreed to buy two onshore wind projects totalling 165MW in Scotland from 3R Energy and Mitchell Energy. It is set to build the pair and repower its nearby 55MW Hagshaw Hill to form a 220MW wind cluster. Read more

ENBRIDGE SELLS SAINT NAZAIRE STAKE TO CPPIB

Enbridge has agreed to sell a 24.5% stake in the planned 480MW Saint Nazaire offshore wind farm in France to Canada Pension Plan Investment Board for €200m. This represents just less than half (49%) of the 50% stake that Enbridge owns in the development. Read more

AEP WINS 810MW SUPPORT IN OKLAHOMA

American Electric Power subsidiary SWEPCO has won Arkansas regulator support to add wind capacity totalling 810MW in Oklahoma. This capacity is made up of stakes in three projects totalling almost 1.5GW. Read more

50HERTZ PARENT CLOSES €750M BOND ISSUE

50Hertz Transmission's parent company Eurogrid has secured €750m liquidity through a 12-year green bond issue. It plans to use these proceeds to finance the development of the 1.5GW Ostwind 1 and 2 offshore links. Read more

GIG TEAMS UP WITH RIDG IN SCOTTISH ROUND

Macquarie's Green Investment Group has teamed up with Scottish developer RIDG to compete in the next leasing round for seabed land off the coast of Scotland, which the The Crown Estate Scotland is due to launch soon.

ACWA AND SILK ROAD TEAM UP ON RENEWABLES

Saudi Arabian developer ACWA Power has brought in China's Silk Road Fund as a partner and 49% shareholder in renewables arm ACWA Power RenewCo, which owns solar and wind assets of 1.7GW in MENA. Read more

MAINSTREAM TO BUILD 630MW CHILE LINK

Mainstream Renewable Power has started building 126.8km transmission lines to connect its 630MW Huemel wind and solar portfolio to the grid in Chile. This is part of Mainstream's 1.3GW Andes Renovables platform. Read more

IDEOL TEAMS UP WITH KEROGEN ON FLOATERS

French developer Ideol has teamed up with private equity house Kerogen to work on a project to pair floating wind with oil and gas platforms. Read more

AVANGRID STARTS ON 306MW IN NEW MEXICO

Avangrid has started building the 111-turbine 306MW La Joya wind farm in New Mexico, which is due to complete by the end of 2020. Read more

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