Statoil ties up with E.ON on €1.2bn offshore wind project

The Norwegian energy giant has increased its foothold in the sector in a bid to diversify away from oil and gas.

Norwegian energy company Statoil has entered the German renewable energy market with a partnership to build a €1.2 billion offshore wind project with E.ON in the Baltic Sea.

Statoil’s 50 percent stake in the 385MW Arkona offshore wind farm extends is push to diversify its portfolio from oil and natural gas. The 60 turbine project will be located 35km north-east of Germany’s Rügen Island, will power up to 400,000 households and should be operational in 2019.

“This investment is in line with our strategy to gradually complement our oil and gas portfolio with profitable renewable energy and other low-carbon solutions,” Eldar Sætre, Statoil’s chief executive, said in a statement.

Statoil has been increasing its offshore wind exposure after launching a new energy division last year. The Arkona project will increase Statoil’s production capacity from offshore wind by 50 percent, raising its combined offshore generation to 1,100MW. Until now, investments have been focused in the UK. It currently operates the 317MW Sheringham Shoal project and is developing the 402MW Dudgeon off the coast of North Norfolk. It is also working with E.ON again for a bid in the 600MW Kriegers Flak offshore wind project, in Denmark.

Statoil also launched a $200 million renewables venture capital fund called Statoil Energy Ventures in February to further diversify its energy assets. Its first investment came a month later when it committed $3 million to US company United Wind and its wind turbine leasing programme.

Investors in Europe view offshore wind as an attractive infrastructure opportunity, but the projects remain expensive and have varying levels of risk. Ratings agencies Standard & Poor’s and Fitch both predicted earlier this year that offshore wind generation will continue to increase, but operation stability is “less certain” than other clean energy projects. One of the main risks is the maintenance of subsea transmission cables and transformers.