Anglo-Dutch supermajor Shell has signed a 15-year power purchase agreement with the largest offshore wind farm in the world.
The deal, which gives Shell 240 megawatts of power produced from the Dogger Bank farm in the North Sea, brings Shell's total offtake of power from the site to 720 MW.
Shell had agreed to buy 480 MW of power from the farm in 2020.
“Offshore wind is playing an increasingly important role in supplying the UK with low-carbon electricity,” Shell Energy Europe vice president David Wells said.
“This long-term agreement expands our portfolio of clean power and further supports the development of one of the most ambitious renewable-power projects in the world.”
Shell’s deals make up 20% of Dogger Bank’s expected 3.6-gigawatt capacity, although the new PPA comes amid concerns about the profitability of the wind farm for its backers.
A recent report by Upstream highlighted how government-sponsored research in Norway had come up with the conclusion that Dogger Bank is unlikely to be profitable for Equinor.
The state-controlled company has a 40% stake in the venture, partnered by SSE and Eni.
But researchers calculated the Dogger Bank project's expected net present value to Equinor at minus £970 million (minus $1.3 billion) and found that the rate of return on investment does not reach the company's own benchmark requirements for profitability.
Meanwhile, Shell joins other oil and gas companies as it searches for ways to diversify its business and decarbonise the industry. Shell has made investments into clean-power projects across Europe and intends to help its customers reduce their carbon emissions.
Shell currently supplies power to energy retailers and is working to increase the amount of electricity it supplies directly to commercial, industrial and residential customers.
- Resources industry body highlights Western Australia’s hydrogen potential
- Chinese yard signs up to build next generation wind turbine installation vessels for Havfram
- Huge 20GW market: Chariot and Total Eren strike major deal to provide renewable power to African mines
- Americas primed for carbon neutral power mix: Rystad Energy