The 7GW worth of German leases awarded earlier this week were the most expensive to date, beating out both the New York Bight auction last year and UK Round 4 in 2021 by a significant margin.

TotalEnergies now holds the record for the most expensive offshore lease purchase ever ($4,162.5mn for 2GW in Project Site N-12.1). The company was awarded one further lease, increasing its global portfolio by 45% on an equity share basis, while bp picked up the remaining two sites, growing its offshore wind pipeline by 58% on an equity share basis (including JVs).

Just under $14bn was committed across the four sites, with 10% to be paid up front and the balance over 20 years from commissioning. This is a substantial sum (equivalent to 60% of the #offshorewind EPC capex expected to be committed in western Europe FIDs in 2023).

Concerns have been raised about the profitability of both projects and supplychain given the record lease fees. It is worth noting, however, that, under the German system, export infrastructure is provided by the transmission system operator, so equivalent capex can essentially be offset by the developer against the lease fee.

Peter Lloyd-Williams, Westwood Global Energy Group

KeyFacts Energy Industry Directory: Westwood Global Energy