Dong Energy A/S plans to invest about $1.8 billion a year on offshore wind projects to offset a “challenging” environment for gas plants, as it ceases to build new coal power facilities, its chief said.
That’s about what the world’s largest developer of offshore wind parks spent last year on turbines installed at sea.
“We think that is around that level we will be working at in the coming years,” said Anders Eldrup, chief executive officer of the Fredericia, Denmark-based company.
Dong announced that Eldrup, who spoke in an interview on March 9, is stepping down as chief executive. Finance director Carsten Krogsgaard Thomsen will be acting CEO until a new chief executive is found, it said, adding that there will be no change in the company’s strategy.
Dong is focusing on renewable sources for electricity generation to shift from fossil fuels and cut emissions, as the rising cost of gas depresses profits for burning the fuel. Profitability of burning gas in the U.K. has fallen 75 percent, to 1.62 pounds ($2.54) a megawatt-hour, in the last six months, according to Bloomberg calculations using broker data.
“It seems to be quite challenging times for the CCGTs,” or combined-cycle gas turbine plants, Eldrup said.
The company doesn’t have “precise investment plans” for new plants, as they are “not very profitable” now, he said. Dong operates gas- fired power plants in Norway, Denmark and the Netherlands and opened its first in the U.K. in south Wales last year.
The company, with about 1.3 gigawatts of operating offshore wind farms and 1.1 gigawatts under construction, plans to build 3 gigawatts of offshore wind by 2020, Eldrup said. Dong may make investments of 10 billion kroner a year for the next two to three years in offshore wind, he said.
Dong will fund new offshore wind plants with company revenue and from selling shares in existing projects, Eldrup said.
Nations are promoting clean energy to curb emissions and meet European Union goals. The U.K. is planning to build 18 gigawatts of offshore wind by 2020, from about 2 gigawatts now, while Germany targets about 10 gigawatts by the same year.
“We are constantly surveying the market for future projects,” Eldrup said. (Bloomberg)