Norway to open new offshore wind lease areas

Norway will open up new areas for the development of offshore wind projects, the country’s Minister of Petroleum and Energy Tina Bru said.

The move is a response to the demands from the local industry which last year recorded an NOK 11 billion (around €1.1 billion) international turnover in goods and services related to offshore wind, Minister Bru said during the Floating Wind 2021 conference in Haugesund.

”The starting point for shaping our policy is that offshore wind is an industrial opportunity for Norway. We need to diversify our industrial base and we need to create new jobs. We want to build on the technology and competence in our oil and gas companies, and our fantastic service and supply industry,” Minister Bru said.

Last year, Norway opened two areas for offshore wind with a combined capacity of up to 4.5 GW – Utsira Nord and Sørlige Nordsjø II.

Now, the Norwegian government will start the process of identifying new areas for offshore wind production and conduct an impact assessment of these areas.

The Norwegian Water Resources and Energy Directorate (NVE) will lead this process and work closely with relevant agencies. The process is expected to take approximately two years, Minister Bru said.

Norway will also designate the state-owned Statnett as the transmission system operator for offshore wind projects.

”…. the government will start working on the regulation for the offshore system operation and will designate Statnett as the system operator under the Offshore Energy Act for cables and installations not regulated under the Petroleum Act,” Minister Bru said.

”We will also assess and possibly propose necessary legislative changes and more detailed rules for efficient access to, and use, of the offshore grid.”

Developers have shown strong interest in the Sørlige Nordsjø II lease area which is suitable for bottom-fixed projects for which the award announcement is expected in the first quarter of 2022, according to Minister Bru.

According to Minister Bru, the projects there are expected to be delivered without the need for government subsidies.

”As scale is important, the government will award 2 or 3 project areas in Sørlige Nordsjø II for development,” Minister Bru said.

”The award will be based on a two-stage process. The first step is a qualification-process. The second step will be an auction where the qualified companies/consortias can participate.”

However, there are some elements that have to be put in place before the selection process can start.

”We will have to assess legal and other effects of hybrid projects. And we will have to set the detailed terms for the auction,” Minister Bru said.

”Many developers are looking into hybrid projects, combining offshore wind farms and interconnectors. Hybrid projects will have effects on our power system, on the electricity flows and prices, and on power exchange on existing interconnectors.’‘

The Norwegian government will assess various effects and legal aspects of hybrid projects with the aim of clarifying these effects and aspects in advance of an award of areas in Sørlige Nordsjø II.

The process for selecting projects at the deepwater Utsira Nord area will be different from the one at Sørlige Nordsjø II.

”Considering the current cost of floating wind, any large-scale project at Utsira Nord will require state aid to be commercially viable. With this in mind, we do not think auctions are the right approach for this area,” Minister Bru said.

The government will stay committed to Enova as the main source for supporting the technological and industrial development of floating offshore wind.

”With technology maturing rapidly, and costs coming down, it is difficult to predict what level of support a project of two- to five hundred megawatts will need,” Minister Bru said.

”We believe the best way forward is to develop projects through the licensing process. When projects have matured sufficiently, we will assess the timing and level of support for floating wind projects. The assessment will be based on updated information from NVE, Enova and other relevant actors.”

The government will consider increasing the support to Enova in the state budget process if the assessments show that a grant will contribute sufficiently to the technology development of floating offshore wind, that the projects are sufficiently mature, and that the project is expected to be profitable for the society,

However, in order to mature the projects, areas need to be awarded first, Minister Bru said.

The government is thus proposing awarding at least three areas of up to 500 MW each at Utsira Nord.

”The award of acreage will be based on qualitative criterias and take place as soon as we have the framework in place. We are aiming for the process to start by the end of this year,” Minister Bru said.

The Norwegian government will also establish an offshore wind collaboration forum to enhance collaboration and reduce potential conflicts. The forum will bring together industry leaders, public authorities, the research community, industrial clusters, users of the ocean space, and additional relevant stakeholders, Minister Bru said.

The aim of this forum is to build competence, find sustainable solutions and thus strengthen the industry’s competitiveness – where collaboration is key.

The forum will address issues like co-existence, supply chain development, and export opportunities, among others. It will be lead by Minister Bru who will invite stakeholders to the first meeting in early September.