World’s Largest Floating Wind Farm Powers Up

Key takeaways

• On Monday, Norwegian energy firm Equinor reported its offshore floating wind farm Hywind Tampen produced its first watts on Sunday
• The wind farm totals 11 turbines, seven of which will power up in 2022, with the rest following in 2023
• Ironically, the renewable energy resource will contribute power toward oil and gas drilling operations in the North Sea
• Several other countries have begun investing in floating wind farms to round out their renewable energy portfolios

On Monday, Norwegian energy firm Equinor announced that its new floating wind farm produced its first watts over the weekend. Hywind Tampen, as the facility is called, kicked on its first turbine Sunday afternoon.

The wind farm sits about 87 miles off the coast of Norway and plans to fully come online between 2022 and 2023. So far, only seven of its eleven turbines are slated to come on in 2022. Even so, Equinor has stated that Hywind Tampen “will be the world’s largest floating wind farm with a capacity of 60 MW” in the meantime.

The completed project should boast a production capacity around 88 megawatts (MW).

Renewable resources meet high emissions

Somewhat ironically, Equinor is an energy firm better known for its role in the oil and gas industry. Perhaps more ironic is the fact that Hywind Tampen, which harnesses a renewable energy resource, was built to power North Sea oil and gas drilling operations.

Geir Tungesvik, Equinor’s executive vice president for Projects, Drilling and Procurement hailed Hywind Tampen as a “unique project.” He added that his proud production has begun at “the first wind farm in the world producing oil and gas installations.”

Already, the first watts have been directed to the Gullfaks oil and gas field. When the array comes fully online, it’s expected to power some 35% of the Gullfaks and Snorre fields’ electricity needs. “This will cut CO2 emissions from the fields by about 220,462 tonnes per year,” the company notes.

Equinor’s executive vice president for Exploration and Production Norway Kjetil Hove added in a statement, “Hywind Tampen cuts emissions from the oil and gas industry and increases the gas export to Europe. This is an important contribution towards transforming the Norwegian continental shelf from an oil and gas province to a broad energy province. Just a few years ago, no one would have believed that offshore platforms could be powered by electricity from floating wind turbines.”

Equinor isn’t alone in its pursuit of meshing renewable and traditional energy sources, however. Several other companies participated in the project, including INPEX Idemitsu, OMV Petrom, Vår Energi and Wintershall Dea.

What exactly is a “floating wind farm”?

Unlike bottom-fixed structures, floating wind farms attach turbines to floating structures held in an area by mooring lines and anchors. Many models borrow from offshore drilling rig designs and use motion controllers to optimize power production while reducing structural stress.

Hywind Tampen’s turbines in particular are installed on floating concrete structures with joint mooring systems. Their stability is provided by gravity. Another design uses semi submersible floaters that rely on buoyancy instead.

These constructions allow wind farms to be placed in deeper waters, expanding the energy-producing area. Floating wind farms boast additional benefits like:

• Capturing stronger, more consistent winds found offshore
• Providing better accommodation for shipping and fishing lanes
• And reducing visual pollution

According to Equinor, nearly 80% of the world’s offshore wind potential lies in waters too deep for regular offshore windmills. That gives floating wind farms greater energy production capacity – enough to power 12 million homes in Europe alone by 2030.

Where irony and controversy meet

Hywind Tampen helps fulfill the Norwegian government’s goals of cutting emissions while growing its burgeoning oil and gas industry. Petroleum development and production comprises about 14% of Norway’s GDP.

In 2021, a political coalition in the country announced that “The oil and gas sector will be developed, not dismantled.” The coalition added that it plans to balance economic and social considerations against climate policies that aren’t “moralizing” while remaining “fair.”

However, this decision sparked criticism from climate leaders who say that growing an emissions-producing industry while slashing emissions elsewhere is hypocritical. The plan was announced shortly after a United Nations study found human fossil fuel emissions are “the main driver of climate change.”

Meanwhile, oil and gas lobby groups praised the decision as ensuring ongoing development and profits while “financing a green transition.”

The irony of a floating wind farm fueling fossil fuel production will likely draw much of the same controversy. Still, proponents hold it’s another crucial step toward transitioning from fossil fuels to renewables long-term.

Sparking a floating wind farm revolution

Equinor built what they called “the world’s first floating wind farm” back in 2017. Called Hywind Scotland, the 30-megawatt facility boasted just five turbines compared to Hywind Tampen’s eventual eleven.

Since then, several major firms have made inroads on the new technology.

In 2021, companies in Japan and Australia made plans to explore or move forward with building offshore wind farms. Similar projects have been initiated in Korea and the UK.

Meanwhile, Norwegian company Statkraft entered a long-term agreement related to a 50-megawatt floating wind farm off Scotland’s coast. China installed 17 gigawatts of offshore wind power, accounting for 80% of the global total.

Additionally, in 2022 the United States declared intentions to produce 15 gigawatts of floating offshore wind capacity by 2035. The Department of Energy is also working on the “Floating Offshore Wind Shot” initiative that aims to reduce the cost of floating technologies by over 70% by 2035.

The White House Fact Sheet adds that “Bringing floating offshore wind technologies to scale will unlock new opportunities for offshore wind power off the coasts of California and Oregon, in the Gulf of Main and beyond.” Eventually, the goal is to provide “enough clean energy to power over five million American homes.”

Welcome to the world of ESG investments

Wind energy is one piece of a thematic investment strategy known as “ESG investing.” Simply put, ESG (energy, social and governance) is about investing with your values.

Companies that fit into this bucket may:

• Produce lower emissions or directly combat climate change
• Work to build up societies in positive ways
• Or have better track records in their management structures or employee treatment

(As you may have guessed, wind energy fits the “E” in ESG.)

In other words: these are often the kinds of companies you inherently like to invest in to make money. Not only are they working toward building a better world in various ways, but ESG investments are projected to be potentially less risky or more profitable than their non-ESG counterparts.

The reason is simple. Because ESG firms are generally more environmentally and socially conscious, they’re less likely to run afoul of local regulations or become embroiled in expensive legal battles.

On another front, ESG firms often operate in forward-facing industries, placing their ideas and technologies on the forefront of innovation. (Not to mention future profit margins. Imagine investing in the ESG version of AppleAAPL
fifty years ago.)

Can ESG investments fit your strategy?

For investors looking at the long-term game, ESG investments can make solid bets.

But because they may be newer or changing companies, they’re also potentially more prone to short-term volatility.

And it’s not uncommon for ESG firms to spend years developing new technologies, during which they may see small or negative profits. That’s not to say there isn’t potential – simply that they’re not there yet.

As an investor, you also have to weigh ESG-based funds that cut out profitable industries that don’t meet their criteria (such as oil and gas firms) against your long-term financial goals.

Consider the new floating wind farm from Equinor. While it’s a 100% renewable energy source, its participation in the oil and gas industry could slash this new technological innovation and market potential from your portfolio by way of simple association.

Not only can such moves lower your profits, but it can also impact your portfolio diversification, which can introduce unnecessary risks into your investment strategy.

For some investors, a purely-ESG portfolio may be the right move. But others may rely on growth from other industries, including those that are in the process of upping their standards but aren’t quite on the ESG spectrum yet.

Take ESG investing to the next level with Q.ai

So, how do you cut through the noise and find the best ESG bets for your portfolio? We believe the answer lies with artificial intelligence, of course.

Using AI-backed research and algorithms, Q.ai’s Clean Tech Kit picks out some of the best forward-facing innovations for our investors.

Better yet, you can pair it with our other Kits, from our wide-ranging Active Indexer Kit to our risk-loving Crypto Kit, to build a well-diversified fund with the potential to see greater performance at more moderate risk levels.

Whether you choose to DIY or let our AI take the reins, we’re here to help you meet your goals for the future. Sure, we’re no floating wind farms. But that doesn’t mean we can’t help investors participate in building a better, more conscious world.

That’s something worth investing in.

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