Analysis: High stakes at sea in global rush for wind power

By Susanna Twidale and Nora Buli

LONDON(Reuters) – Global competition for offshore wind power is so hot that license auctions now resemble the oil and gas competitions of just a few years ago, and some of the names are familiar too as global oil majors move aggressively into renewable energy.

The drive among top fossil fuel producers to make fast inroads into lower-carbon businesses comes as more and more countries roll out plans to boost wind power in an effort to reduce their carbon footprint.

The cost of securing sites to develop has risen to levels that some top wind farm operators say are unsustainable and which will hurt consumers by driving up power prices.

Governments worldwide are expected to offer a record number of tenders for offshore wind sites and capacity this year, with more than 30 gigawatts (GW) on the block.

That is almost as much as total existing global wind capacity of 35 GW, and the tenders are shaping up to be the most competitive ever.

Several European oil firms including Total, BP and Shell plan to rapidly increase their renewable power portfolios, reducing reliance on oil and gas to satisfy investors who want to see viable long-term low-carbon business plans and governments which are demanding reductions in emissions.

The oil majors, with deep pockets, are willing and able to pay up for a foothold in the market, even though margins are much smaller than for their traditional operations.

At a leasing round held by the Crown Estate earlier this year for seabed options around the coast of England, Wales and Northern Ireland, BP and German utility EnBW paid a record price to secure two sites, representing 3 GW.

Developers pay an annual option fee prior to taking a final investment decision (FID), which in the case of BP and EnBW will amount to around 1 billion pounds ($1.38 billion) made in four annual payments of 231 million pounds for each of the two leases.

Traditional offshore wind developers, Iberdrola, Orsted and SSE all confirmed to Reuters they had been unsuccessful in the leasing round.

The previous Crown Estate offshore round was held more than a decade ago when the market was a fraction of its current size and structured without option fees, an added cost developers will now have to recoup.

“Someone is going to have to pay and it’s probably, at least in part, the consumer,” said Duncan Clark, Orsted’s UK head.

Some analysts also said the high fees threaten to erode the huge cost reductions the industry has achieved over the past decade.

Mark Lewis, Chief Sustainability Strategist at BNP Paribas, said the Crown Estate option fee would add around 35% to project development costs, assuming today’s building costs.

BP said the fee was justified by the prime location of the two Crown sites: in the Irish Sea, in shallow water, close to the shore allowing for shorter, cheaper connection cables, and next to each other allowing for cost efficiencies across both projects.

“Not every resource base was born equal,” BP’s low carbon energy chief Dev Sanyal told Reuters, adding that those factors made the company confident of achieving the 8-10% return it has set for renewable projects.

EnBW said the prices achieved reflect the different intrinsic value of the respective projects.

Some in the industry fear a knock on effect with Ben Backwell, CEO of the Global Wind Energy Council (GWEC), saying there aren’t enough projects currently to meet demand.

“So you are going to create an over-heated market when what we want to see is more opportunities made available,” he said.

A price cap at a Crown Estate Scotland tender of Scottish seabed leases taking place this year has already been hiked tenfold.

Orsted, Iberdrola and SSE all confirmed to Reuters they expect to enter the Scottish round, and while neither BP, Total nor Shell would directly confirm their involvement to Reuters, analysts said it would be surprising if oil firms did not participate.

Projects from the recent Crown Estate auction will not be built until 2027-2030, when development costs are expected to have fallen further, at least partly offsetting higher fees.

Announcements about larger turbines, for example, show the pace of technology development remains very active, said Julien Pouget, senior vice president renewables at Total, which won a lease in the Crown Estate auction with Macquarie’s Green Investment Group.

“(That) makes us optimistic on the potential in terms of cost reductions,” he said.

While Britain offers a guaranteed return on some renewables, the amount has fallen sharply, tracking lower development costs.

At a 2019 auction for contract for differences (CfD), which guarantee operators a minimum price for electricity sold, a record low price of 39.65 pounds per megawatt hour (MWh) was achieved, some 30% lower than the previous auction held in 2017 and lower than current average electricity prices.

The next CfD auction is expected at the end of 2021, too early in the development process for the recent Crown Estate lease winners.

Although Britain is the world’s largest offshore wind market, with around 10 GW of capacity, opportunities elsewhere are increasing and tenders are expected to be keenly fought.

European countries including Denmark, Poland and France are expected to hold auctions this year, with more regions planning to build up capacity.

In the United States, President Joe Biden wants to deploy 30 GW of offshore wind power by 2030. There are currently 13 projects in development, with a combined capacity of around 9.1 GW and expected to come online by 2026.

Iberdrola is already involved in tenders in Rhode Island and Massachusetts through its U.S. arm Avangrid, while BP sealed a $1.1 billion deal last year to buy 50% stakes in two U.S. developments from Norway’s Equinor.

In Asia, Japan plans to install up to 10 GW of offshore wind capacity by 2030, and 30-45 GW by 2040, with analysts expecting tenders for a total of around 3 GW of capacity to be held this year.

Iberdrola, which bought Japanese developer Acacia Renewables last year, said it expects to participate in tenders there.

“Asia is going to be a huge market for renewable growth globally and we as a global player want to be actively participating in that,” said Jonathan Cole, managing director at Iberdrola Renewables’ offshore wind division.

However, experts cautioned new regions cannot charge as much for seabed leases or expect to offer such low price support as Britain.

“We have a mature industry in Europe and the UK but it’s not there yet in Asia, or the U.S.,” GWEC’s Backwell said.

“Each region has to build up its own industry and skills before they can expect to see the most competitive prices.”

($1 = 0.7246 pounds)

(Reporting By Susanna Twidale and Nora Buli; additonal reporting by Nicola Groom, Yuka Obayashi, Vera Eckert and Christoph Steitz. Editing by Veronica Brown and Kirsten Donovan)

Blinken warns entities involved in Nord Stream 2 pipeline to immediately quit

WASHINGTON (Reuters) – The U.S. State Department is tracking efforts to complete Russia’s Nord Stream 2 natural gas pipeline and evaluating information on entities that appear to be involved, U.S. Secretary of State Antony Blinken said on Thursday.

“Any entity involved in the Nord Stream 2 pipeline risks U.S. sanctions and should immediately abandon work on the pipeline,” Blinken said in a statement, adding the Biden administration is committed to complying with 2019 and 2020 legislation with regards to the pipeline and sanctions.

Shortly after Blinken’s statement, Senator Ted Cruz, a Republican and an opponent of the pipeline, lifted a hold he had placed on two of President Joe Biden’s nominees, including William Burns for director of the Central Intelligence Agency.

Nord Stream 2, led by Russia state energy company Gazprom with its Western partners, would double the capacity of an existing link to take Russian gas to Germany under the Baltic Sea. Biden believes the project is a “bad deal” for Ukraine and Central and Eastern European allies, Blinken said.

The pipeline would bypass Ukraine, likely depriving it of lucrative transit revenues and potentially undermine its efforts against Russian aggression.

Sanctions law that went into effect this year require the State Department to sanction companies that help Nord Stream 2 lay pipeline or provide insurance or certification of its construction. Nearly 20 companies, mostly insurance firms, recently quit the project after Washington warned them in recent months that they could be sanctioned.

Cruz said he would maintain a hold on Wendy Sherman, who Biden has nominated to be the No. 2 official at the State Department until the administration imposes full sanctions on ships and companies involved in the project. Sherman easily passed through the Senate Foreign Relations Committee last week and a hold would only likely delay a full Senate vote on her nomination.

(Reporting by Daphne Psaledakis and Timothy Gardner; Editing by Chris Reese)

Why Republican voters say there’s ‘no way in hell’ Trump lost

By Brad Brooks, Nathan Layne and Tim Reid

SUNDOWN, Texas (Reuters) – Brett Fryar is a middle-class Republican. A 50-year-old chiropractor in this west Texas town, he owns a small business. He has two undergraduate degrees and a master’s degree, in organic chemistry. He attends Southcrest Baptist Church in nearby Lubbock.

Fryar didn’t much like Donald Trump at first, during the U.S. president’s 2016 campaign. He voted for Texas Senator Ted Cruz in the Republican primaries.

Now, Fryar says he would go to war for Trump. He has joined the newly formed South Plains Patriots, a group of a few hundred members that includes a “reactionary” force of about three dozen – including Fryar and his son, Caleb – who conduct firearms training.

Nothing will convince Fryar and many others here in Sundown – including the town’s mayor, another Patriots member – that Democrat Joe Biden won the Nov. 3 presidential election fairly. They believe Trump’s stream of election-fraud allegations and say they’re preparing for the possibility of a “civil war” with the American political left.

“If President Trump comes out and says: ‘Guys, I have irrefutable proof of fraud, the courts won’t listen, and I’m now calling on Americans to take up arms,’ we would go,” said Fryar, wearing a button-down shirt, pressed slacks and a paisley tie during a recent interview at his office.

The unshakable trust in Trump in this town of about 1,400 residents reflects a national phenomenon among many Republicans, despite the absence of evidence in a barrage of post-election lawsuits by the president and his allies. About half of Republicans polled by Reuters/Ipsos said Trump “rightfully won” the election but had it stolen from him in systemic fraud favoring Biden, according to a survey conducted between Nov. 13 and 17. Just 29% of Republicans said Biden rightfully won. Other polls since the election have reported that an even higher proportion – up to 80% – of Republicans trust Trump’s baseless fraud narrative.

Trump’s legal onslaught has so far flopped, with judges quickly dismissing many cases and his lawyers dropping or withdrawing from others. None of the cases contain allegations – much less evidence – that are likely to invalidate enough votes to overturn the election, election experts say.

And yet the election-theft claims are proving politically potent. All but a handful of Republican lawmakers have backed Trump’s fraud claims or stayed silent, effectively freezing the transition of power as the president refuses to concede. Trump has succeeded in sowing further public distrust in the media, which typically calls elections, and undermined citizens’ faith in the state and local election officials who underpin American democracy.

In Reuters interviews with 50 Trump voters, all said they believed the election was rigged or in some way illegitimate. Of those, 20 said they would consider accepting Biden as their president, but only in light of proof that the election was conducted fairly. Most repeated debunked conspiracy theories espoused by Trump, Republican officials and conservative media claiming that millions of votes were dishonestly switched to Biden in key states by biased poll workers and hacked voting machines.

Many voters interviewed by Reuters said they formed their opinions by watching emergent right-wing media outlets such as Newsmax and One American News Network that have amplified Trump’s fraud claims. Some have boycotted Fox News out of anger that the network called Biden the election winner and that some of its news anchors – in contrast to its opinion show stars – have been skeptical of Trump’s fraud allegations.

“I just sent Fox News an email,” Fryar said, telling the network: “You’re the only news I’ve watched for the last six years, but I will not watch you anymore.”

The widespread rejection of the election result among Republicans reflects a new and dangerous dynamic in American politics: the normalization of false and increasingly extreme conspiracy theories among tens of millions of mainstream voters, according to government scholars, analysts and some lawmakers on both sides of the political divide. The trend has deeply troubling long-term implications for American political and civic institutions, said Paul Light, a veteran political scientist at New York University (NYU).

“This is dystopian,” Light said. “America could fracture.”

Adam Kinzinger, a Republican member of the U.S. House of Representatives, is among the few party members to publicly recognize Biden’s victory. He called his Republican colleagues’ reluctance to reject Trump’s conspiracies a failure of political courage that threatens to undermine American democracy for years. If citizens lose faith in election integrity, that could lead to “really bad things,” including violence and social unrest, he said in an interview.

David Gergen – an adviser to four previous U.S. presidents, two Democrats and two Republicans – said Trump is trying to “kneecap” the Biden administration before it takes power, noting this is the first time a sitting American president has tried to overthrow an election result.

It may not be the last time. Many Republicans see attacks on election integrity as a winning issue for future campaigns – including the next presidential race, according to one Republican operative close to the Trump campaign. The party, the person said, is setting up a push for “far more stringent oversight on voting procedures in 2024,” when the party’s nominee will likely be Trump or his anointed successor.

Other Republicans urged patience and faith in the government. Charlie Black, a veteran Republican strategist, does not believe Republican lawmakers will continue backing Trump’s fraud claims after Biden is inaugurated. They will need White House cooperation on basic government functions, such as appropriations and defense bills, he said.

“People will come to see we still have a functioning government,” Black said, and Republicans will become “resigned to Biden, and see it’s not the end of the world.”

The Biden campaign declined to comment for this story. Boris Epshteyn, a strategic advisor to the Trump campaign, said: “The President and his campaign are confident that when every legal vote is counted, and every illegal vote is not, it will be determined that President Trump has won re-election to a second term.”

‘THERE’S JUST NO WAY’

Media outlets declared Biden the election winner on Nov. 7. As calls were finalized in battleground states, Biden’s lead in the Electoral College that decides the presidency widened to 306 to 232.

Many Republican voters scoff at those results, convinced Trump was cheated. Raymond Fontaine, a hardware store owner in Oakville, Connecticut, said Biden’s vote total – the highest of any presidential candidate in history – makes no sense because the 78-year-old Democrat made relatively few campaign appearances and seemed to be in mental decline.

“You are going to tell me 77 million Americans voted for him? There is just no way,” said Fontaine, 50.

The latest popular vote total for Biden has grown to about 79 million, compared to some 73 million for Trump.

Like many Trump supporters interviewed by Reuters, Fontaine was deeply suspicious of computerized voting machines. Trump and his allies have alleged, without producing evidence, a grand conspiracy to manipulate votes through the software used in many battleground states.

In Grant County, West Virginia – a mountainous region where more than 88% of voters backed the president – trust in Trump runs deep. Janet Hedrick, co-owner of the Smoke Hole Caverns log cabin resort in the small town of Cabins, said she would never accept Biden as a legitimate president.

“There’s millions and millions of Trump votes that were just thrown out,” said Hedrick, 70, a retired teacher and librarian. “That computer was throwing them out.”

At the Sunset Restaurant in Moorefield, West Virginia – a diner featuring omelets, hotcakes and waitresses who remember your order – a mention of the election sparked a spirited discussion at one table. Gene See, a retired highway construction inspector, and Bob Hyson, a semi-retired insurance sales manager, said Trump had been cheated, that Biden had dementia and that Democrats planned all along to quickly replace Biden with his more liberal running mate for vice president, Kamala Harris.

“I think if they ever get to the bottom of it, they will find massive fraud,” said another of the diners, Larry Kessel, a 67-year-old farmer.

Kessel’s wife, Jane, patted him on the arm, trying to calm him, as he grew agitated while railing against anti-Trump media bias.

Trump’s rage against the media has lately included rants against Fox News. He has pushed his supporters towards more right-wing outlets such as Newsmax and One America News Network, which have championed the president’s fraud claims.

Rory Wells, 51, a New Jersey lawyer who attended a pro-Trump “stop the steal” election protest in Trenton last week, said he now watches Newsmax because Fox isn’t sufficiently conservative.

“I like that I get to hear from Rudy Giuliani and others who are not immediately discounted as being crazy,” he said of Trump’s lead election lawyer.

Newsmax CEO Chris Ruddy said the network’s viewership has exploded since the election, with nearly 3 million viewers nightly via cable television and streaming video devices.

Ruddy said Newsmax isn’t saying that Biden stole the election – but they’re also not calling him the winner given that Trump has valid legal claims. “The same media who said Biden would win in a landslide now want to not have recounts,” he said in a phone interview.

Charles Herring, president of One America News Network, said in a statement that his network has seen three weeks of record ratings, as “frustrated Fox News viewers” have tuned in.

‘NO WAY IN HELL’

Some Trump supporters said they would accept Biden as the winner if that is the final, official result. Janel Henritz, 36, echoed some others in saying that she believed the election included fraud, but perhaps not enough to change the outcome. Henritz, who works alongside her mother Janet Hedrick at their log cabin resort in West Virginia, said she would accept the outcome if Biden remains the winner after recounts and court challenges.

“Then he won fair and square,” she said.

In Sundown, Texas, Mayor Jonathan Strickland said there’s “no way in hell” Biden won fairly. The only way he’ll believe it, he said, is if Trump himself says so.

“Trump is the only one we’ve been able to trust for the last four years,” said Strickland, an oilfield production engineer. “As far as the civil war goes, I don’t think it’s off the table.”

If it comes to a fight, Caleb Fryar is ready. But the 26-year-old son of Brett Fryar, the chiropractor, said he hoped Trump’s fraud allegations would instead spark a massive mobilization of Republican voters in future elections.

Asked whether Trump might be duping his followers, he said it’s hard to fathom.

“If I’m being manipulated by Trump … then he is the greatest con man that ever lived in America,” Caleb Fryar said. “I think he’s the greatest patriot that ever lived.”

(Reporting by Brad Brooks in Texas, Nathan Layne in West Virginia and Tim Reid in California; editing by Brian Thevenot)