Shell Walks Away from Scottish Wind Dreams as Costs Soar

This article first appeared on GuruFocus.

Shell (NYSE:SHEL) is backing away from two flagship Scottish offshore wind projects, signaling a shift in how the energy giant is approaching renewables. The company, which had partnered with Iberdrola's ScottishPower Renewables, has returned the lease for its CampionWind project to Crown Estate Scotland after assuming full ownership earlier this year. Shell said substantial pre-investment work had been done to de-risk the site but concluded that returning the lease offers the best opportunity for any potential future the site may have.

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Under CEO Wael Sawan, Shell has taken a harder look at capital discipline, pulling back from large-scale wind developments as project costs climb. The company already dropped a US offshore wind project earlier this year that faced political opposition from the Trump administration. Shell won the Scottish leases in 2022 when offshore wind costs were lower, but the surge in expensesespecially for floating wind technologyhas since eroded margins. Bloomberg previously reported that Shell had explored selling down its Scottish wind holdings as part of this recalibration.

That leaves ScottishPower Renewables to push ahead with MarramWind, the larger 3-gigawatt site off Scotland's northeast coast, which could become one of the world's first commercial floating wind farms. While Shell's retreat narrows its offshore exposure, it also frees up capital for what management sees as stronger near-term returns in oil, gas, and low-carbon fuels like hydrogen and bioenergya strategic balance the company believes could better serve investors in today's market.

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