In the latest edition of the Energy Institute’s New Energy World, Bracewell’s Tracy London and Eimear Murphy examine prospects for the offshore wind sector in 2024 and address trends in the oil and gas sector, focusing on upstream M&A activity and financing.
This year, 2023, was a perfect storm for the offshore wind industry across the globe said London. Permitting delays, grid connection hurdles, inflation and supply chain challenges led to some developers wanting to renegotiate previously agreed offtake deals or end deal commitments with payment of fines. We saw an uncapped negative bidding auction in Germany’s 7 GW wind auction. And, in the UK, no offshore wind projects were awarded contracts for differences (CfDs) in Round 5.
So, what lies ahead for 2024? London identified five key themes that look set to impact the offshore wind sector: Bigger wind turbine generators (WTGs), developers consolidating current portfolios, increased M&A activity and new market entrants, OEMs and the supply chain squeeze, and pressure on government agencies.
Murphy added that we have seen an uptick in M&A activity this year and expect this to continue in 2024. A continuing trend is the majors seeking to rebalance their large portfolios by prioritizing core assets in jurisdictions and existing non-core operations. This has triggered sales processes by the majors across the globe. In addition, there are a number of macro-drivers boosting M&A activity. High commodity prices have inflated asset values and made an attractive time for sellers to divest their assets.
