Featured: Eric Danos in 1012 Industry Report
Eric Danos, CEO of Danos Ventures, recently spoke to Sam Barnes at the 1012 Industry Report on the future of wind energy in the Gulf of Mexico. Read his excerpt below.
What does a lackluster lease sale mean for the future of wind energy in the Gulf of Mexico?
In late August, it became starkly apparent that the economics for offshore wind in the Gulf of Mexico aren’t quite where they need to be. The Bureau of Ocean Energy Management’s first lease auction ended with just one of three available tracts sold.
German company RWE Renewables purchased the tract off the coast of Lake Charles for $5.6 million, while two other tracts near Galveston received no bidders at all. The lackluster bidding underscored several problems facing the offshore wind industry as a whole, as companies struggle with soaring costs, rising interest rates and permitting delays.
That’s been enough to prompt some companies to tap the brakes on entering the market. Eric Danos, owner and CEO of Danos Ventures, says the dismal showing is indicative of the challenges the industry faces.
That’s why he’s backing off the pursuit of wind energy for now as he waits for the industry to mature.
“The costs have gone up significantly and, fundamentally, the Gulf of Mexico hasn’t been an ideal market for wind energy,” Danos says. “We don’t need to be an early adopter. There’s too much risk in the market and the fundamentals still need to be worked out. We are taking a ‘wait and see’ approach.”
It comes down to dollars and cents, Danos says. “That’s why a lot of the contracts on the East Coast are being renegotiated,” he adds. “They are happy to have wind energy, but they want it at the same or lower cost than carbon field energy. That’s the dilemma now.”
Danos says his company will instead double down on oil and gas. “We see some tremendous opportunities to grow our services portfolio in traditional oil and gas,” Danos says. “We will continue to do that as long as the market creates those opportunities for us. There will ultimately be a transition to renewable energy, but I think it’s still a way out for us.”