Last week’s first and eagerly awaited Norwegian offshore wind auction of the 1.5GW Sorlige Nordsjo 2 field was won by Belgian player Parkwind. The Japanese-owned renewable company teamed up with Swedish Ikea fund Ingka to emerge successfully from the competitive auction rounds at around 10 eurocents/kWh ($0.11/kWh). Norway took a leap forward in its quest to becoming a leading offshore wind nation.
The Norwegian government sees it as a 3-in-1 'Easter Kinder Egg': solving a growing power need, reducing climate emissions and, perhaps most importantly, creating a thriving export industry to overtake the coastal nation’s biggest job creator – its oil & gas service cluster that employs about every 10th Norwegian worker along its long coast. There are several obstacles threatening this scheme but Norway has got a proud industrial history at sea, and with urgency and the right measures, they can be overcome.
Norway needs speed
Norway’s oil services industry commands a leading global position with industrial flagships within oil rigs, supply vessels, subsea equipment and other subsectors. The country plans to build on its broad supplier base transforming it to renewable offshore wind.
Standing on the shoulders of the oil & gas industry, Norway is already exporting offshore wind equipment and services for more than two billion euros annually. It plans to triple it during this decade, growing successes like the substations Aibel is delivering to developers including Orsted, SSE and Equinor for some of the world’s largest offshore wind farms, for instance Hornsea and Dogger Bank.
However, most European nations with their own offshore wind targets aim to do the same as Norway. And some are already further afield. The UK has got its Sector Deal, Denmark its State of Green. Norway has a need for speed. It is urgent for the Scandinavians to build a home-market training ground for developing its national offshore wind supplier base.
Suppliers need to tune their strategies and identify their role in the offshore wind value chain. This is challenging, with order books currently filled by profitable fossil projects fuelled by geopolitics, high energy prices and historical tax breaks. But they have no time to lose, and their government sits with the key to unlock further supply chain investments.
The Norwegian authorities need to provide a clear project roadmap to populate its stated vision of distributing 30GW of licenses by 2040. It is a very good start that the bottom-fixed Sorlige Nordsjo 2 field was awarded last week. It is a disappointment that the floating Utsira field award in the same week was postponed until 2025.
Floating future
Floating offshore wind is the most promising opportunity for Norway’s supplier industry, enabling the Norwegian supply chain to harness its expertise within complex maritime operations derived from decades of offshore project experience. Established European bottom-fixed supply chains are harder to break into, whereas the floating supply chain is still only at a conceptual stage when it comes to large project scale.
Setting up a commercial-scale offshore wind farm means placing thirty to fifty Eiffel Tower-sized constructions floating on the deep sea while coping with ocean storms. This demands highly complex offshore project execution, which is what many Norwegian suppliers excel at after a long history of some of the biggest platform developments in the world. Two out of three of all floating semisubmersible oil platforms on the planet are designed by Norwegian engineers.
The Norwegian industry’s departure point is excellent. However, there are clear differences to oil & gas. Floating offshore wind needs to rapidly come down the cost curve to around half of today’s 10-15 eurocent level. The key is industrialisation. Offshore wind is serial fabrication, unlike bespoke, tailor-made oil & gas equipment with layers of procedures. To slide down the cost curve, like onshore and bottom-fixed offshore wind have done, the first large project developments are dependent on risk reduction in the form of governmental financial support. This requires a solid public-private sector partnership, which is common within what its inhabitants like to label 'the Norwegian Model'.
From white sails to steam, from ships to oil production, from shallow platforms to deep subsea, the small nation of Norway has been a global leader within maritime industries throughout the last 175 years. With renewable offshore wind 'Team Norway' is poised to do it again.
Anders Nordberg is head of offshore wind for Innovation Norway
