Statoil Expects Cost Reductions in Offshore Wind

One reason that renewable energy hasn’t caught on in a big way is the cost associated with energy generation.

David Ashworth - Author

Nov. 1 2016, Updated 5:04 p.m. ET

Renewable energy is costly

One reason that renewable energy hasn’t caught on in a big way is the cost associated with energy generation. Because of these costs, some nations have been providing tax incentives to companies engaged in this business. In the previous article, we saw how the United States had provided a shot in the arm to solar and wind energy by extending tax credits.

Norwegian energy company Statoil (STO) has some encouraging news on the cost front. In an interview with Bloomberg New Energy Finance, Irene Rummelhoff, the executive vice president for new energy solutions at STO, said that both conventional, fixed-bottom offshore wind projects and newer, floating-turbine technology could witness sharp falls in costs.

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Providing an example from her own company, she informed Bloomberg New Energy Finance that the company’s second offshore wind project in the North Sea, which is set to begin operations in 2017, will generate electricity at a 35% lower cost than its first project, Sheringham Shoal. Furthering her argument, she said that at Statoil’s third project, “We are doing real feasibility studies and we are seeing another probably 30 percent reduction potential.”

What does this mean?

The information shared by STO is good news for others in the wind power space. Since costs are a major hindrance for renewable energy, a reduction will be beneficial. Moreover, in terms of ESG (environmental, social, and governance) criteria, this would count as a positive for STO and all other providers who enter the space.

A prominent ETF in the wind energy space is the First Trust ISE Global Wind Energy ETF (FAN). Renewable energy ETFs include the Guggenheim Solar ETF (TAN), the PowerShares WilderHill Clean Energy ETF (PBW), and the First Trust NASDAQ Clean Edge Green Energy ETF (QCLN).

ESG isn’t an obscure area concerning only niche investors. Even large investors have taken cognizance of it. We’ll take a look at one such example in the next article.


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