Norwegian shipping giant Knutsen has launched into the international renewable energy market through the formation with compatriot utility Haugaland Kraft/SKL of offshore wind developer Deep Wind Offshore (DWO), in the latest signal of the industrial transition gathering pace in the Nordic country’s maritime sectors.

Green is the new black. Subscribe to Accelerate

Get the market insight you need into the global oil & gas industry's energy transition – from the new newsletter from Upstream and Recharge. Sign up here

Being headed up by CEO Knut Vassbotn – who previously led business development for oil & gas contractor Aker Solutions’ offshore wind unit and spearheaded the spin-out of Aker Offshore Wind last year – the new company plans to bid into Oslo’s recently announced 4.5GW offshore wind tender, expected to formally kick off in the spring, as well as targeting emerging plays in Asia and the US.

“Offshore wind is a fantastic market and with the expected growth rates we see being talked about – to 1.4TW by 2050 [globally] as many forecast – we wanted to seize the opportunity in what is going to become – together with floating wind – a huge industry,” said Vassbotn, speaking exclusively to Recharge.

“This country has a strong maritime history, built on international industries such as fishing, shipping and oil & gas,” he noted, “[and] renewable power production is nothing new to Norway, as electrification of the country from hydropower started more than hundred years ago.

“If Norway is to be fully electrified, there will be a need for new renewable energy. The knowledge we have acquired from these industries is relevant for the development of a new offshore industry,” said Vassbotn.

DWO plans to bid into Norway’s maiden offshore wind tender, unveiled last June, which encompass 4.5GW of projects in two vast swathes of water off the Nordic country, the Utsira Nord area and Sorlige Nordsjø II.

The two offshore wind zones hold distinct significances for the Norwegian energy transition. Utsira Nord lies in deepwater acreage off the west coast of the country, waters heavily populated by ageing oil & gas complexes and adjacent to a coastal region facing a predicted power supply shortfall “in the medium-term”, while Sorlige Nordsjø II is on the borders of the Danish North Sea to the south and so geographically close to the European grid and continent's power markets.

Deep Wind Offshore CEO Knut Vassbotn Photo: DWO

“These are two very different value propositions,” stated Vassbotn. “The region [onshore from Utsira in western Norway] has a power deficit forecast by [national transmission system operator] Statnett of 1.5-2GW in the medium-term, so that could facilitate, say, four 500MW floating wind projects, and that would be ideal to feed into the substations to meet this expected demand growth.

“And at the same time [such projects would] decarbonise the offshore oil & gas facilities [in this area of the Norwegian continental shelf].

“And in the south, [where Sorlige Nordsjø II is located], while there are some oil & gas facilities that could be similarly decarbonised, it will be more about targeting export into the European grid.”

Despite the size of the home market prize taking shape, DWO, Vassbotn underlined, will be “equally interested” in getting steel in the water in emerging markets off Asia and the Americas. “We are looking to develop projects off Norway – it is a little early to set our capacity targets – but we are equally interested in developing projects internationally.

“Deep Wind Offshore isn’t a ‘Norwegian play’ in offshore wind. We have strong Norwegian owners in Knutsen with an international [industrial] footprint and so it makes sense to leverage that, particularly in less mature markets.”

“I now see similar triggers in Norway as I have seen in the most advanced offshore wind markets internationally. The opening of the two areas for offshore wind could be a new industrial adventure for Norway, and with the two areas opened, Norway can take a position as a leading offshore wind nation built on our expertise from the maritime sector, oil & gas and hydropower production,” said Vassbotn.

The formation of an offshore wind developer backed by a shipping company of the scale of Knutsen – which has an enterprise value of some $2.2bn built around a large fleet of offshore shuttle tankers and also has marine technology development arm – and a regional utility like Haugaland Kraft/SKL which serves a group of municipalities on the west coast of Norway – is an industry first.

But it flags up a widely anticipated industrial market trend in Norway, with a report from cross-sector body KonKraft last year pointing to offshore wind as key to the country’s industrial energy transition, with the oil & gas sector and its supply chain needing to diversity into new markets at the same time as cutting emissions by 40% by 2030 in line with government climate-neutrality goals.

Linking Knutsen – which has 16 vessels in its newbuild portfolio including a number that could be “repurposed” for operations work in offshore wind – and Haugaland Kraft/SKL, said Vassbotn, brings together international maritime “project and operational experience” with a utility in an area that has “upcoming demand growth” and a key role in Norwegian hydropower’s ability to provide “balancing power [for the domestic and wider European electricity networks] in the future

“The model is relatively unique,” he said, “but I think you’ll more of these industrialists and utilities coming in [to the offshore wind market]. This is not so much about the money – we know there are plenty of investors out there and plenty of cash available. You need partners that are going help you deliver on what is eventually going to be built and owned.”

DWO aims to capitalise on the “world-leading capability in the Norwegian [offshore oil & gas] supply chain” to speed its ambitions in its domestic market in building a portfolio of offshore and floating wind projects, but it also scoping out potential for first ‘blue economy’ plays in the North Sea.

“Knutsen, as a technology group working to implement low emission solutions, is exploring opportunities with coastal industry and maritime sector – these are areas so fundamental to us in Norway, for our children and grandchildren – and offshore wind power,” said Vassbotn.

'Back to the 1960s'

“The prospect for floating and offshore wind is like going back to the late-1960s when oil was found off Norway and the number of opportunities is just fantastic.”

Though there are currently no offshore wind turbines off Norway, aside from the 2.3MW Hywind Demo, a floating unit installed in 2009 and now serving as a R&D centre.

But there are projects currently heading for installation that could be key to sector’s fortunes in the region – led by Equinor’s under-construction 88MW Hywind Tampen array and prototypes including the largest floating wind turbine in the world, a 10MW concept being built as part of the €25m Iberdrola-led EU Flagship project.

A recent study from advocacy body WindEurope spotlighted Norway as having the potential to deliver some 30GW of more than 250GW of Northern Seas wind power that would need to be built by 2050 to carry Europe to carbon-neutrality by mid-century under the aegis of the European Green Deal.

According to the Norwegian ministry of petroleum and energy figures, this could translate into a market for domestic suppliers in the offshore wind sector will swell to €10bn ($11.83bn) in turnover by 2050.