Macquarie targets North Sea as Europe’s green energy hub

Macquarie targets North Sea as Europe's green energy hub

Macquarie Group Ltd. is betting that the North Sea, the engine of Britain’s ever-thriving oil and gas industry, can be turned into Europe’s green energy hub.

The Australian Bank, a leading investor in energy infrastructure, is acquiring offshore wind farms, pipelines and networks that will be in a prime position to produce, transport and store clean hydrogen that can replace gas heating in homes in Great Britain. could. Brittany. It has invested more than $50bn in UK assets since 2005, much of it in the North Sea.

The UK wants to be carbon neutral by 2050, and clean energy has gained even more momentum since Russia invaded Ukraine. While it may not be possible to extract much natural gas from the emptied North Sea, its shallow waters and strong winds are a boon to the renewable electricity needed to produce green hydrogen.

“The UK has a huge opportunity to become Europe’s energy hub,” Martin Bradley, Macquarie Asset Management’s head of infrastructure investment in Europe, the Middle East and Africa, said in an interview. “We believe in the North Sea for energy storage. I think UK hydrogen production should be offshore.”

The UK and Europe are increasing investment in renewable energy, and the cost of generating electricity from solar and wind power is lower than the cost of conventional sources such as coal, gas and nuclear power. The climate crisis has already highlighted the need to transition to green forms of energy, but Russia’s war in Ukraine is forcing countries to think about ways to ensure the security of supplies.

declining production
Britain’s stance on phasing out oil and gas has softened in recent months, but increasing production in the North Sea is not a long-term option. Production has declined over the past two decades, with aging now producing only a third of the gas produced in 2000.

Still, the infrastructure built around the fossil fuel industry and the roughly 300,000 jobs created could easily be turned to renewable energy, according to the bank, which is interested in 10 offshore wind farms or projects in the North Sea. ,

“There’s a lot of investment needed, and if governments are concerned about energy security, they need to consider renewable energy,” Bradley said. “That’s where there are more opportunities because you’re not creating a new dependency on someone else.”

With electricity demand expected to double by 2035, the UK is targeting 50 gigawatts of offshore wind power by 2030, more than three times the current capacity and enough to power at least 47 million homes.

“In the case of offshore wind power there is an opportunity to combine one of the lowest-cost installed forms of renewable energy and combine it with hydrogen, which will do most of the decarbonization,” said Macquarie Asset Director Ed Northam. Green Investment Group of Management in the United Kingdom and Europe.

hydrogen production
He said the bank’s offshore wind projects will produce green hydrogen by 2030. The fuel will be delivered to customers through its investment in Cadant Gas Limited, which operates half of the eight local gas distribution networks. Macquarie also invested in Storega Ltd, which is developing the Acorn Blue Hydrogen project.

Britain is undoubtedly facing competition from the Netherlands, which is turning to industrial customers to use the fuel in manufacturing. And Macquarie also has to compete with some of Europe’s major oil companies, which are planning massive investments in green hydrogen.

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The bank bought a majority stake in the UK gas network in a deal with the transmission system valued at around $10bn. Some of that infrastructure may become trapped assets if the transport is not converted to hydrogen. It would also be expensive to replace the traditional gas boilers that heat 85% of British homes.