A plan unveiled by Norway’s government today (Wednesday) to prepare a first 1.5GW offshore wind auction has been received with disappointed by the sector, which had hoped for a much larger area off the Nordic country to be allocated – and greater visibility on when next tranches would be awarded.
The Norwegian wind energy association (Norwea) had expected 3GW of the Southern North Sea 2 (Sørlige Nordsjø 2) zone to be part of the first tender, the group said in a reaction, calling the announcement only a “first step” that is “better than standing still”, after Oslo in June 2020 unveiled it aimed to auction 4.5GW of acreage of its its shores.
“Initially, the offshore wind investment in the Southern North Sea is half of what we had envisioned,” Norwea chief executive Åslaug Haga said.
“It is a shame because it means less production of renewable energy, fewer players investing and, not least, fewer assignments for the Norwegian supplier industry.”
The new government under Prime Minister Jonas Gahr Støre had actually identified offshore wind as the country’s largest renewable energy export. But Oslo nevertheless plans to link the first 1.5GW phase of Southern North Sea 2 only to the Norwegian mainland (to the North), and not as well to much larger key consumer markets, such as Germany (to the South).
Norwea sees that as a strategic mistake that may have repercussions on the availability of support for other offshore wind areas.
“With the possibility of connecting to a North Sea network, the Southern North Sea II could have been profitable without support, but now a need for support arises here as well,” Haga explained. Power prices in Germany are far higher than in Norway, which derives most of its electricity from very cheap hydro-power.
Possible Norwegian support instead could be spent on the 1.5GW Ustira North area further to the North that is only apt for floating wind, Haga thinks. Support at Utsira is needed to “develop Norwegian competitive advantages in floating wind power”, she added.
Norway’s state-controlled oil & gas giant Equinor has been a pioneer in floating wind, and currently is building the 88MW Hywind Tampen array off Norway, which will be the world’s first floating wind array linked to an offshore oil & gas field once it is expected to be up and running later this year.
The government so far hasn’t provided an answer to what support scheme it envisages for offshore wind, other than that it will be determined by auction, Norwea went on.
“There is broad agreement in the industry that the allocations should be made on qualitative criteria, partly because it is best with a view to developing a supplier industry in Norway,” Haga said.
Foreign domination?
Interest in Norway’s first offshore wind tender so far has been elevated, with some domestic and many international sector heavy weights and consortia saying they plan to bid. Among them are Vattenfall/Seagust, EDF Renewables, Iberdrola, TotalEnergies, RWE, Orsted, Shell, BP, Equinor, Macquarie’s Green Investment Group, Fred Olsen Renewables, Statkraft and Aker Offshore Wind.
The Norwegian Offshore Wind Cluster also said it had wished for the entire 3GW Southern North Sea 2 zone to be auctioned off, and lamented the details presented by the government on the first auction are unclear, with no timeline for the Utsira North zone given at all.
“We had hoped that the announcement of Utsira Nord started earlier, now it seems to be delayed until the autumn,” the cluster’s manager, Arvid Nesse, said.
“That's unfortunate. We are world leading in floating offshore wind in Norway, but several countries are breathing us down our necks. Scotland is already underway, and we are in danger of lagging behind. We had expectations that this would be ready before the summer.”
The cluster also fears that in an auction model, foreign companies may dominate, with Norway losing control in the process of building a solid Norwegian industry and a home market.
“We who represent both suppliers and developers expect a model that ensures allocation based on quality, where Norwegian base and technology are highly emphasised,” Nesse stated.
