ENI Eni Spa

By Selina Williams 

LONDON--The offshore wind-energy industry will soon be flooded by competition as big oil companies join utilities and small renewable players in the growing sector, said the chief executive of the world's biggest offshore wind company, Dong Energy.

Henrik Poulsen also said some new investment in offshore wind energy was coming from companies primarily associated with traditional oil and gas markets, like Royal Dutch Shell PLC, Eni SpA of Italy and Total SA France.

"They have been hesitant," said Mr. Poulsen, president and chief executive of Dong Energy said in an interview with The Wall Street Journal.

"But I think they've come to a point where they're thinking 'Gee, maybe we should start mobilizing behind renewables, maybe the green transformation won't slow down.'"

Dong was once one of Europe's most coal intensive utilities but the state-owned enterprise has steered its business away from coal and oil and gas extraction in the past decade toward offshore wind. The move has helped lift profits thanks to Europe's significant wind power subsidies.

The company says it has a 26% share of the installed offshore wind-energy capacity in the world, more than twice as much as its nearest rival.

Dong on Thursday announced its plans for an initial public offering this summer in what could be one of Europe's biggest stock market listings this year. The IPO is expected to consist of a sale of at least 15% of the company. The Danish government has a 58.8% stake in Dong but plans to retain a controlling stake of 50.1%. Other shareholders include Goldman Sachs, which has a 17.9% stake.

Mr. Poulsen said he was bracing for more competition from bigger companies.

"We're talking about huge companies with significant capital and execution power. We need to just keep sharpening our sword," he added.

For instance, Dong is bidding against Shell, the Anglo-Dutch oil giant, for a contract to develop two 350-megawatt wind farms off the coast of the Netherlands.

Shell said it had substantial expertise in the North Sea and in managing large projects and expected to be able to put its broader experience and capabilities to use in making the Netherlands project a success.

This week Italy's Eni SpA said it plans to build renewable energy projects in Italy, Pakistan and Egypt, while French oil major Total SA has set up a natural gas, renewables and power division and this week announced a $1 billion acquisition of French high-technology battery company Saft. A spokeswoman said Total was committed to renewable energy.

Norway's Statoil, which last year established a separate energy unit to capitalize on the growing renewable energy sector, said in April it had joined with with utility E. ON AG to develop an offshore wind farm off the coast of Germany.

While the investments of Europe's biggest energy companies in renewable energy represent only a tiny fraction of investments in their traditional oil and gas business, their interest in the sector marks their growing efforts to deal with investor concerns about climate change and growing global political commitment in the past two years to reduce carbon emissions.

"Oil and gas will remain import for decades to come, but growth in renewables will be steep and we believe we can take part in that growth and create value," a spokesman for Statoil said.

Write to Selina Williams at selina.williams@wsj.com

(END) Dow Jones Newswires

May 13, 2016 12:20 ET (16:20 GMT)

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