Shell has become the latest major to retreat from its earlier plans for investments in offshore wind development agreeing to sell its majority position in one of South Korea’s largest projects. Investing in the project in 2021, Shell said at the time it viewed offshore wind energy as a key part of a net-zero energy system, but more recently it has sold its investments in wind in favor of other portions of the business.
Under the agreement announced today, Shell will sell its 80 percent stake in South Korea’s MunmuBaram project to partner Hexicon, an early project developer in floating wind, based in Sweden. Hexicon reports that the acquisition is being made possible with support from Glennmont Partners, one of Europe’s largest infrastructure funds focused on clean energy. The company will draw on its loan facility with Glennmont initially paying Shell $5 million to take 100 percent ownership of the MunmuBaram joint venture. The agreement also provides for up to $50 million over three years in profit sharing for Shell.
“South Korea continues to be a leading market with good conditions for the development of floating offshore wind. Through this transaction, South Korea remains a core market for Hexicon and strengthens our position as a leading global developer of floating offshore wind,” says Marcus Thor, CEO of Hexicon.
Hexicon has been working on the project since 2018 and in August 2020 began measurements and data collection at the project location. The joint venture with Shell was launched in September 2021 while the project was still at a feasibility assessment stage. At the time, Shell cited its long history in South Korea, the strong potential for wind energy, and the company’s expansion of activities into floating wind.
“Korea’s capabilities in the fabrication of offshore facilities and shipbuilding could play a pivotal role in the development and fabrication of floating offshore wind foundations not only for Korea but also for the region and beyond,” said Joe Nai, Shell’s General Manager, Offshore Wind Asia announcing the 2021 partnership.
The plan for MunmuBaram calls for approximately 1.125 GW of power generation from the wind farm which will be located off the coast of Ulsan City in the southeastern region of South Korea. In 2022, they proposed 84 wind turbines designating Vestas and its 15 MW turbine as the preferred supplier for the project. At a location 40 to 50 miles off the coast, the topography will require float wind turbines. Hexicon has a patented floating wind design for foundations utilizing two turbines on one platform.
The company has made good progress in South Korea, including receiving the power licenses required to develop the wind farm. They also entered into a tentative offtake agreement for an industrial user. Ulsan is one of the industrial bases of South Korea.
Hexicon reports that South Korea will represent approximately 15 percent of its net portfolio in terms of megawatts.
Shell says it has over 2 GW of offshore wind in operation. It had reported its pipeline and the potential for more than 9 GW. While they continue to hold positions in wind energy in Norway and the UK, Shell has also exited projects including in September 2022 two planned Irish windfarms. After acquiring French floating wind specialist Eolfi in 2019, Shell was reported in May 2023 preparing to sell the company after Wael Sawan became CEO and said Shell would be focusing on creating greater value for shareholders.