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    Shell (SHEL)-Led JV to Withdraw SouthCoast Wind Power Project

    June 9, 2023 - Zacks Equity Research


      A Shell plc SHEL and Ocean Winds (a Spanish renewable energy company) joint venture (JV) announced its decision to petition for the withdrawal of the proposed 1.2 gigawatts (GW) SouthCoast wind power project. The venture cited declining economy and lack of financing as the primary reasons behind this move.

      Financing Concerns

      The JV expressed concerns regarding the sale prices in the contracts that it signed to sell electricity to utility companies. It believes that these prices are too low to attract the necessary financing, especially considering the unforeseen increases in supply-chain costs and interest rates.

      Rebid Plans and the Massachusetts Government

      SouthCoast, however, stated that it intends to rebid the contracts under the latest solicitation for offshore wind power from the Massachusetts government. This decision aligns with the JV's commitment to developing regional renewable energy projects. The Shell-led venture aims to explore alternative opportunities for the SouthCoast wind power project by participating in Massachusetts' upcoming round four tender.

      Massachusetts Developer's Similar Move

      The JV is not alone in its decision to rebid a project into the aforementioned tender. Avangrid, a U.S.-based energy company and another prominent Massachusetts developer, also expressed its interest in rebidding the project. This participation demonstrates the ongoing commitment of multiple stakeholders to the growth of renewable energy in the state.

      Importance of the SouthCoast Wind Power Project

      The wind power project is a crucial initiative in the pursuit of sustainable and clean energy solutions. With a planned capacity of 1.2 GW, it has the potential to contribute significantly to Massachusetts' renewable energy goals. The power plant's strategic location off the coast of Massachusetts enables the harnessing of strong offshore winds, making it an ideal site for generating renewable electricity.

      Environmental Benefits and Energy Independence

      Renewable energy ventures like the SouthCoast wind power project play a vital role in mitigating climate change and reducing greenhouse gas emissions. By generating clean electricity, this project would reduce Massachusetts' dependence on fossil fuel and help move toward a more sustainable energy future. The venture also aligns with the state's commitment to achieving carbon neutrality and establishing energy independence.

      Job Creation and Economic Growth

      In addition to the environmental benefits, the SouthCoast wind power project holds significant potential for job creation and economic growth. The wind farm's development, construction and operation would require a skilled workforce, stimulating local employment opportunities. The project would also attract investments and contribute to the growth of related industries, further bolstering the regional economy.

      Collaboration and Technological Advancements

      Renewable energy projects often necessitate collaboration between various stakeholders, including government bodies, private enterprises and local communities. The SouthCoast wind power project offers an opportunity for such collaboration, fostering partnerships and knowledge exchange. Moreover, the project's development and operation would contribute to advancements in offshore wind technologies, enhancing efficiency and cost-effectiveness in the long run.


      The Shell-led JV's decision to withdraw the SouthCoast wind power project proposal serves as a blunt reminder of the challenges in the renewable energy sector. Despite the setbacks, the industry remains committed to finding solutions and driving the transition to a cleaner and more sustainable future.

      Zacks Rank and Key Picks

      Shell, an energy and petrochemical company, explores and extracts crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas, produces gas-to-liquids fuels and other products, and operates upstream and midstream infrastructure for delivering gas to the market.

      SHEL currently carries a Zacks Rank #3 (Hold).

      Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum EPM and Murphy USA MUSA, each sporting a Zacks Rank #1 (Strong Buy), and Archrock AROC holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.

      Evolution Petroleum: EPM is worth approximately $271.47 million. EPM currently pays a dividend of 48 cents per share, or 5.88% on an annual basis.

      The company currently has a forward P/E ratio of 7.38. In comparison, its industry has an average forward P/E of 19.60, which means EPM is trading at a discount to the group.

      Murphy USA: MUSA is valued at around $6.30 billion. In the past year, its shares have risen 19.4%.

      MUSA currently pays a dividend of $1.52 per share, or 0.53% on an annual basis. MUSA's payout ratio currently sits at 6% of earnings.

      Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.

      Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.

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      To read this article on click here.

      Zacks Investment Research


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