Norwegian export credit guarantee agency GIEK’s investment portfolio has started shifting markedly toward renewable energy, spearheaded by the country’s rapidly-expanding offshore wind sector, but it will still “take some time” for the scales to tip from its current majority backing of oil & gas projects, according the agency’s energy and industry director.

Ivar Rekve notes that GIEK has stopped issuing new credit guarantees in the offshore oil sector, only now underwriting “ongoing” projects, and has at the same time seen offshore wind’s slice of it NKr60bn ($6.6bn) portfolio quadruple to NKr4.2bn since the end of 2019.

“We have seen this record growth in the last six months and we hope we will see growth of offshore wind [in our portfolio] at the same pace for several years,” he said, speaking to Recharge.

“Our portfolio is a reflection of Norwegian industrial export. We have had up to 85% of portfolio in the offshore oil & gas supply sector. So [now that that figures is under 60%] we are glad to see the [Norwegian offshore] industry changing and to be able to help seize opporunities for our exporters, as their markets are changing and they are transitioning to a greener sector.”

With the climate crisis ratcheting up pressure on the Norwegian government to speed up the steps to reach carbon neutrality and revenues from its biggest industrial sector dwindling due to a coronavirus-collapsed crude market, offshore – and particularly floating – wind are being seen as central to the country’s energy transition at home, where Rekve admits it continues to be an “uphill battle” politically, and lucrative clean-energy export markets abroad.

“Norway is ‘cursed’ with a renewables surplus because of our hydropower network. As a consequence, t’s been a political uphill battle to have acceptance for subsidies for offshore wind,” he said. “And it has generally been felt that [because of the great water depths prevalent off most of Norway] floating would be better suited to the Norwegian industrial sector, and of course floating is not yet commercial.”

Now Rekve hopes GIEK can be part of a “true transformation” that will evolve in time with Norway’s maritime and oil & gas supply chains by helping in the uncharted waters that offshore wind represents to some more risk-adverse lenders.

“Offshore wind is financed commercially in many markets, and the role for GIEK and other export credit agencies is most important in new markets, when the projects are large in terms of capital investment and when there is new types of risks, like market risk, new technologies and so on,” he said.

“But by adding our financing along with that of the banks and lending [Norway’s] Triple-A credit rating we can improve the terms for these projects.”

The rapid rise of offshore wind markets around the world has led Oslo to mandate GIEK to “actively seek” new business shepherding Norwegian exporters – led by offshore oil & gas mainstays Aker Solutions, Kvaerner and Aibel – in a market estimated to have the potential to be worth NKr50-60m annual “or much more” by 2030 as the industry explodes globally at gigawatt-scale.

Rekve points to the “burgeoning but capital-intensive” sector’s expansion outside its European home patch, including Asia, where GIEK most recently signed a NKr1.3bn service delivery guarantee for Fred Olsen Windcarrier that cleared the way for the contractor’s jack-up to install turbines on the 589MW Changfang and Xidao wind farm off Taiwan.

The growing Norwegian industrial consensus on an energy transition driven by offshore wind in domestic and international markets is highlighted by a recent report from KonKraft, a cross-sector group – made up of the Norwegian Oil & Gas Association, the Norwegian Shipowners Association, the Federation of Norwegian Industries and a number of the country’s unions – which put sea-based wind power together with carbon capture and storage and hydrogen at the heart of a national plan to reach “near zero” emissions levels by 2050.

The Norwegian parliament recently voted through a highly anticipated tender that opens up two vast swathes of water in its part of North Sea to development with up to 4.5GW of floating and bottom-fixed wind arrays — to electrify ageing oil & gas complexes as well as producing direct-to-grid utility-scale power.

“The government sees that we [as a country] have to change. Covid-19 is making it even clearer. Norway is dependent on the oil market. We need to make the effort to drive this change,” said Rekve. “The Norwegian [offshore oil & gas] is rightly confident that they have the technology and the expertise for these emerging [offshore wind] markets. Especially when we are talking about floating.

“To develop the Norwegian [offshore wind] sector with a home market first is very good for all our industries – for supply chains to work together to bring costs down and collaborate both and home and internationally.”

Though there are no offshore wind turbines off Norway, aside from the floating 2.3MW Hywind Demo, there are four projects currently heading for installation that could be key to sector’s fortunes in the region: Equinor’s 88MW Hywind Tampen array, which will part-power the Snorre-Gullfaks oil complex in the North SEa, the floating TetraSpar and SeaTwirl prototypes, and Enbridge’s bottom-fixed 350MW Havsul 1.

The 3,500sq km of offshore areas being opened to wind developments by the government — Utsira Nord in the deeps off the west coast and Sorlige Nordsjo 2 in the south near Denmark — point to the dual role foreseen for the resource: providing carbon-cutting electricity to offshore oil & gas complexes — which was seen originally by many in the renewables industry as the “dirtification” of offshore wind but has become more accepted as the vice of climate change tightens — as well as direct-to-grid utility-scale power.