Offshore wind and green hydrogen are getting a $16 billion headstart on COP28 goals to triple renewables by 2030.
Announced Tuesday, the hefty investment comes via agreement between Spanish renewables giant Iberdrola and the United Arab Emirates-based developer Masdar to co-develop projects in Germany, the United Kingdom, and the United States.
The most high-profile element of the partnership is that Masdar will take on a 49% stake in Iberdrola’s 1,400 megawatt East Anglia 3 offshore wind project, currently under construction in the U.K. That deal could be signed as soon as the first quarter of 2024, the companies said.
East Anglia 3 represents part of the nearly $11 billion worth of fully financed offshore wind Iberdrola currently has under development, and is Masdar’s second investment in an Iberdrola project; in July Masdar agreed to co-invest in the Baltic Eagle wind farm, which is expected to come online in 2024.
Iberdrola also has over 60 green hydrogen projects globally, including the 105 MW Puertollano plant, which has been operational since 2022. Of those projects, the company says it is “exploring and developing” projects in six U.S. states and has agreements to build a handful of plants in the U.K.
The $16 billion commitment comes toward the tail-end of a challenging year for wind. Despite analyst assessments that tripling renewables must involve “concerted action” on wind development, offshore wind saw a spate of canceled projects in the latter half of the year, as well as delays spurred by supply chain constraints, high inflation, and high interest rates.
As Bloomberg New Energy Finance analyst Jenny Chase told Latitude Media last month, one of the headwinds facing the industry is the incredibly low price of solar. It creates a landscape where solar is poised to “cannibalize the returns of other clean power plants such as wind farms, preventing build,” she said.
In light of those headwinds, the wind-focused research company 4C Offshore reduced its forecast of global build-out by 25% over the next four years.
On the other side of the Iberdrola and Masdar partnership, green hydrogen is also facing cost challenges, which are hamstringing deployment. There is plentiful federal funding for large-scale projects on the horizon, including from programs like the U.S. Hydrogen Production Tax Credit and the EU Important Projects of Common European Interest. However, according to the International Energy Agency, long delays in fund distribution pose another challenge.
Annual low-emissions hydrogen production is predicted to reach 38 million tons by 2030, the IEA said, assuming all announced projects come online. That presents an immense investment opportunity, especially because at present, only 4% of potential 2030 production has had a final investment decision.
