Equinor ASA, a Norwegian energy giant, has made a strategic decision to withdraw from several offshore wind projects in response to mounting costs. The company has canceled its projects in Spain, Portugal, and Vietnam, following a similar decision to exit Vietnam earlier this year. This move reflects the challenging economic environment currently affecting the offshore wind industry.
Equinor’s head of renewables, Paal Eitrheim, explained that the company has been facing significant financial pressures due to inflation, high interest rates, and supply chain delays, making projects more expensive and time-consuming. As a result, Equinor has been forced to reassess its capital allocation priorities and prioritize projects that offer a higher return on investment.
Despite these withdrawals, Equinor remains committed to its long-term renewable energy goals. The company aims to achieve an installed renewable energy capacity of 12-16 gigawatts (GW) by 2030, a significant increase from its current capacity of 0.9 GW. However, Eitrheim emphasized that this target is flexible and may be adjusted to ensure profitability.
Equinor acknowledges that the rising costs are impacting different renewable energy sectors in varying degrees. While offshore wind projects are facing the most significant challenges, onshore wind and solar projects have been less affected. This differentiation may influence Equinor’s future investment decisions as it navigates the current market environment.
Despite the recent setbacks, Equinor’s renewables division is actively pursuing other projects. The company is currently constructing the first phase of the Dogger Bank offshore wind farm in the UK, alongside SSE and Vaargroenn. Equinor is also nearing the final investment decision on its Empire Wind project near New York and two Baltic Sea wind farms in Poland.
Equinor’s recent decisions highlight the complexities faced by the offshore wind sector in today’s economic climate. While the company is withdrawing from certain markets to manage costs effectively, it remains committed to pursuing projects that align with its long-term strategic goals and financial priorities. As the renewable energy industry evolves, Equinor aims to maintain its position as a key player by focusing on profitability and sustainable growth.
