Sustainable energy projects all over the world have traditionally relied on significant government subsidies to incentivize construction. A German company recently won approval for a renewable energy project without such subsidies. The event, announced April 14, is sure to mark a major milestone in the proliferation of clean power around the globe.

The project in question is a series of wind farms that will be located in the North Sea, about 62 miles northwest of the German island of Borkum. In partnership with a Danish company, the project will provide German households with access to electricity generated by these offshore windmills, and earn revenue directly from this service. This will require not only more windmills to create the power, but significant investment to lay undersea cables and other infrastructure. German consumers are willing to pay for it.

Leaders behind the project estimate it will be fully operational by 2024, and use wind turbines nearly twice the size of models currently available. According to records of the deal, the company will bring offshore electricity to the German wholesale market at a price of 60 euros ($64) per megawatt-hour. German consumers already use energy sold at a wholesale price of 40 euros per megawatt-hour.

While this represents a significant cost increase, it is one that the wind farm company believes will be fair and profitable. Indeed, the company already has an established track record of business success, earning a 16.5% return on capital expenses in 2016.

As government subsidies for clean power decline around the world, some worry that prices could become more unstable in the near future. The best hope for continued affordability of clean energy is steady growth in the sector. Analysts, though, say that as Germany transitions away from fossil fuels and toward renewables, electricity prices may rise at first but eventually bring prices down.

While Europe already boasts a handful of offshore wind farms, the U.S. is only just getting started. A small project off the coast of Rhode Island became the first of its kind to go online in the U.S. last year.



SOURCES:

https://www.nytimes.com/2017/04/14/business/energy-environment/offshore-wind-subsidy-dong-energy.html?ref=energy-environment

  • Recent News
    Bridge Bank company logo red black and white
    Bridge Bank Extends a $5 Million Monthly Recurring Revenue Line of Credit Facility to One Medical Passport
    Bridge Bank company logo red black and white
    Bridge Bank Extends $2.5 Million Credit Facility to NORCAL Ambulance
    Bridge Bank company logo red black and white
    Bridge Bank Closes on $25,000,000 Credit Facility for Targeted Lease Capital
    Bridge Bank company logo red black and white
    Bridge Bank Extends $15,000,000 Growth Capital Term Loan to Examity
    Bridge Bank company logo red black and white
    Bridge Bank's Business Escrow Services Group Launches New Paying Agent Platform
  • Recent Insights
    dr-sohn-insight
    Rising Inflation, How Worried Should We Be?
    Protect Your Business and iPhone from Cybersecurity Attacks
    bbk-logo-insights
    Bridge Bank’s Syndication Capabilities Helps Clients Grow
    pdh-epayables-tool
    Western Alliance Bank Announces Electronic Accounts Payable via Payer Direct Hub®
    Chicago Report Image
    Chicago's VC Ecosystem Generated Record Funding and Exit Activity During Pandemic
  • Get Started