A North Sea Auction Produces Big Plans for Scottish Wind Farms

Oil giants like BP and Shell as well as Iberdrola, the Spanish utility, look like the big winners in Scotland’s first offshore wind auction, whose results were announced on Monday.

If the proposed wind farms are constructed, they would triple Britain’s capacity to generate electricity from turbines at sea.

They would also advance still nascent plans to transform the Scottish North Sea region from oil and gas production into a major area for renewable electric power.

“This is not just going to be a matter of producing green power,” said Soeren Lassen, head of offshore wind at Wood Mackenzie, a market research firm. “This is fuel to build up a green economy,” he added.

In awarding the leases, the Scottish government is also trying to persuade the oil companies, which have been laying off workers as investment in oil and gas plummets, to retain a substantial presence in Scotland.

“For a number of key companies this will underline their commitment to the area,” said Barney Crockett, the lord provost, or mayor, of Aberdeen, the oil hub.

Companies were bidding on the chance to develop offshore parcels covering 2,700 square miles. The auction will bring in nearly 700 million pounds, or about $955 million, in option fees to the Scottish government. But the work will take time: Energy executives said the Scottish projects were unlikely to start generating power before the late 2020s.

“We secured the blocks that we wanted,” said Louise Kingham, head of country for Britain at BP, which gained the option to develop a large wind farm near Aberdeen with capacity comparable to a nuclear power station, in partnership with EnBW, a German utility.

Ms. Kingham said BP would invest £10 billion in the wind farm, including the acquisition of four service vessels and initiatives to modernize Leith, Edinburgh’s port. It is expected to become a manufacturing center for offshore equipment. BP also plans for Aberdeen, now a center for undersea technology for the oil industry, to become an operations and maintenance hub for the company’s wind business.

Ms. Kingham said there was now “a real opportunity” for Scotland to become a center for renewable energy, including hydrogen, electric vehicle charging and other solutions to climate change.

The Scottish government insisted that winning bidders spend substantial sums with local businesses. Overall, the 17 offshore wind projects awarded are likely to bring in tens of billions of pounds in investment, bolstering the British and Scottish economies.

Thomas Brostrom, senior vice president for renewables at Shell, said that the company had promised that 40 percent of its investment would go to Scottish firms and that his company, like BP, was considering making Aberdeen into a center for wind power. Shell and Iberdrola’s subsidiary, ScottishPower, won two large tracts off northeast Scotland with a depth of as much as 330 feet of water.

Alvaro Martinez Palacio, managing director for offshore wind at Iberdrola, which won the largest amount of acreage, partly in partnership with Shell, estimated that the capital costs for the company’s awarded wind farms would be £10 billion to £20 billion.

The Scottish projects are also likely to be test sites for floating wind turbines, which are anchored to the seabed rather than attached. Floating turbines can be placed in deep water, which describes much of the area covered by the Scottish leases, as well as places like the California coast.

lSo far, though, floating turbines are still too costly for wide commercial deployment. Shell’s two wind farms, which amount to about 20 percent of the capacity awarded, would need to be on floating structures, which are still in the experimental stage.

A key issue is where the power will go. Overall, the potential capacity that has been awarded is likely far too much for the Scottish system. Southbound cables will be needed to take power to major population and industrial centers in England. Eventually, the Scottish power may also be used to generate hydrogen, a clean-burning gas, and the electricity could be sent across the North Sea to Norway or Germany, executives say.

Holger Grubel, head of portfolio development at EnBW, BP’s partner, said building infrastructure for sending power south and finding other ways to make use of it were “a crucial element in being successful in actually delivering the wind farms on time.”