Exclusive: Shell withdraws from major Irish offshore wind projects

The unexpected move by the multinational energy behemoth could damage Ireland’s ambition to achieve an 80 per cent cut in energy emissions

Gordon Shearer of Shell, and Val Cummins and Hugh Kelly of Simply Blue Group pictured at Loop Head lighthouse last November, at the official announcement of the two firms’ partnership on the Western Star floating wind project. Shell has now withdrawn from the plan. Picture: Diane Cusack

Shell, the multinational energy giant, is pulling out of the Irish renewables sector in a potentially significant blow to the country’s climate ambitions, the Business Post can reveal.

The move represents a u-turn by the company, which just last November agreed a deal to acquire a 51 per cent share in the Western Star Floating wind project off the coast of Clare from Simply Blue Group, a Cork-based energy company.

Shell previously said the project had the potential to generate 1.35 gigawatt (GW) of energy, enough to power more than 1.1 million homes.

Shell had also struck a similar agreement to jointly develop the Emerald floating wind project off the south coast of Ireland with Simply Blue.

A spokesman for Shell said: “Shell and Simply Blue Group confirm that Shell will end its involvement in the Western Star and Emerald offshore wind projects in Ireland.”

In a statement, Simply Blue Group said that it “remains fully focused on delivering the exemplary Emerald and Western Star projects off the coast of Cork and Clare which will deliver a combined 2.65 GW of floating offshore wind power for Ireland.”

“Simply Blue Group are progressing towards a new strategic partnership, building on the momentum of both projects to deliver to facilitate government targets for Phase 2 of Ireland’s offshore wind development,” the statement added.

It’s understood efforts to secure a new partner are in the early stages.

The Western Star project is due to be developed in two phases with 300 megawatt (MW) to 450 MW of capacity coming on stream in the first and the remaining 700MW-900MW to follow afterwards.

Some 300MW of installed capacity is planned initially through the Emerald project, with the potential to scale-up to a total installed capacity of 1GW.

This is equivalent to powering 800,000 Irish homes or the capacity of the Moneypoint power station, Ireland’s largest electricity generation station.

Shell’s withdrawal from the Irish renewables sector represents a potentially significant blow to Ireland’s target of achieving an 80 per cent cut in energy emissions.

Equinor, the Norwegian energy giant, confirmed last year that it was exiting the Irish market, citing frustrations with the regulatory and planning process here.

One source said Shell was focusing its efforts on countries with more accommodating legislative frameworks.

Equinor had been working with the ESB since 2019 to jointly build a 1.4GW floating offshore wind farm off the coast of Clare and Kerry by 2028 at a cost of circa €5 billion.

Sources in the energy sector described Equinor’s departure at the time as a “huge blow” to Ireland’s climate ambitions, as offshore wind developments require very large companies with significant financial firepower and technical expertise to deliver them.

The Business Post understands that the draft terms and conditions for the very first Offshore Renewable Electricity Support Scheme (O-RESS) auction caused significant disquiet among renewable energy developers when they were released late last year, particularly a clause requiring companies to put up multimillion-euro security guarantees for projects.

Under the draft terms for the O-RESS auction, a successful energy company would be required to put up a “performance security’, which is essentially a bond to be kept in escrow until the project is delivered.

This will require developers to put up a bond of €24 for every megawatt hour of energy the proposed project will deliver. As most offshore wind projects are very large in size, the bond required typically runs into the tens of millions.

A major issue in the draft guidelines was believed to relate to a clause which stated that the Minister for Energy may take the bond if the project has not been granted planning consent by 2024.

It’s unclear whether the same concerns contributed to Shell’s decision.

The Commission of Regulation of Utilities (CRU) is currently holding a series of consultations on offshore grid connection policy which it said last week would enable developers to bid confidently in the forthcoming O-RESS auction.

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