Deal Details: EOLFI has installed 670 MW of projects and has 6.5 GW of assets currently under construction, across France, the UK, the US, and Asia. A small portion of the business concentrates on the development of onshore wind and solar projects.
Deal rationale: Enerdatics understands that the possible sale is part of Shell’s plan to streamline its renewable business, amid the recent macroeconomic headwinds. Shell acquired EOLFI back in Nov’19 with the aim of enhancing its existing offshore wind team and scaling up its power generation business. However, Enerdatics observes that since the acquisition, offshore wind developers have faced several challenges including cost inflation and supply chain bottlenecks. These headwinds have resulted in several projects being delayed or rendered economically non-viable, which has dampened investor appetite in the offshore wind space. Last year, Shell canceled the construction of a pilot project for a floating wind farm planned off the coast of Brittany in north-western France, while simultaneously exiting its partnership with the Simply Blue Group for the Western Star and Emerald floating offshore wind projects in Ireland. Further, the company chose not to bid in the recent French tender for an offshore wind farm, despite being qualified to do so.
While Shell is looking into the sale of its floating wind development platform, it is still progressing on certain floating wind projects in the UK and South Korea. The company secured rights to develop 5 GW of floating wind projects in the UK under Crown Estate Scotland’s ScotWind leasing round, in collaboration with Scottish Power. The partners confirmed their plans to proceed with the project roughly a year ago, and have even announced a ~$100mn investment in the local supply chain. Additionally, Shell is jointly pursuing 1.3 GW of floating wind projects in South Korea with CoensHexicon.
Enerdatics believes that Shell will continue to pursue floating wind initiatives in partnership with companies that can augment its deepwater operating experience with the technological expertise required for floating wind developments.
The above analysis is proprietary to Enerdatics’ energy analytics team, based on the current understanding of the available data. The information is subject to change and should not be taken to constitute professional advice or a recommendation.
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