Google and Microsoft are looking at possible investments in offshore wind farms in Britain, as part of their strategy to “green” their electricity use, a leading adviser to the energy industry has said.
Interest from large multinationals and other investors new to the offshore wind business is holding out a lifeline for an industry hit by a collapse in traditional sources of finance.
John Lynch, the head of power for Europe at Bank of America Merrill Lynch, said he “would not be surprised” if information technology companies keen to cut their carbon dioxide emissions were to invest in European offshore wind “in the not too distant future”.
Google and Microsoft both refused to comment on possible future investment plans, but a commitment to offshore wind would fit with their strategies to reduce the cost and environmental impact of their high levels of electricity consumption.
Google has invested tens of millions of dollars into renewable energy research in the US. Microsoft has been taking steps to cut its power consumption, for example by siting its new European “mega data centre” in Dublin, taking advantage of the cold climate to reduce the need for mechanical cooling.
Dominic Maclaine of New Power, an industry journal, said: “Data centre servers have significant power needs, and it is understandable that internet firms are increasingly keen to ensure that the power they buy is seen to be ‘green’.”
A huge expansion of offshore wind power will be essential if the government is to hit its target of generating about 30 per cent of Britain’s electricity from renewable sources, but the financial crisis has raised doubts about whether developers will be able to raise the estimated £100bn of investment that is needed.
Mr Lynch, who is advising RWE of Germany on a planned offshore wind farm in Wales, estimated that traditional project finance from banks had dropped 50-80 per cent from its peak before the crash.
He argued that other investors would step in to fill that gap, including sovereign wealth funds from countries in the Middle East or Asia looking for assets in Europe, Chinese and other companies seeking to acquire expertise in offshore wind to take back to their home countries, and the European Investment Bank, as well as energy-hungry multinationals.
Companies such as Google and Microsoft would never finance the majority of a project that could cost £1bn or more, he said, but could take minority stakes.
Charles Anglin of the British Wind Energy Association said he expected the next big growth in the industry to be led by large electricity consumers.
“Companies with a big electricity bill will be looking to get into the business and supply themselves,” he said.
However, the offshore wind industry is still in its infancy, and costs are much higher than for onshore wind.
Andy Cox, an energy partner at KPMG, said: “At a time when capital is in short supply and everyone is driving down costs, it could be some time before we see US multinationals invest in offshore wind in Europe.”
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