Important clarifications for offshore wind in Norway
On June 8th, the Norwegian Minister for Petroleum and Energy, Tina Bru, announced that the first licenses for development of offshore wind in Norway may be granted in early 2022.
Last year, two areas offshore Norway were opened up for development of offshore wind, being Sørlige Nordsjø II, which is most suitable for bottom-fixed offshore wind, and Utsira Nord, which is most suitable for floating offshore wind. Industry participants have shown great interest in offshore wind projects in Norway, and news about area allocation and license application procedures have been early awaited.
During a speech yesterday, the Minister made several important announcements for the development of offshore wind in Norway. We have summarised the key take-aways below:
- At Sørlige Nordsjø II, two or three areas for project development will be allocated through a two-stage process, with a qualification step and thereafter an auction process. The government aims to announce the auction for Sørlige Nordjø II in Q1 2022.
- At Utsira Nord, at least three areas with installation capacity of up to 500 MW each, will be allocated through qualitative criteria. The government aims to start the process by the end of 2021.
- Bottom-fixed offshore wind projects are expected to be developed on a commercial basis, without state aid. Large-scale floating offshore wind projects at Utsira Nord may obtain financial support from Enova.
- Statnett will be designated as system operator for offshore cables not regulated under the Petroleum Act, and the government will start working on regulations for the offshore system operation. This clarification has been long awaited, and will hopefully contribute to a systematic approach when developing an offshore power grid over the time to come. The announcement does not indicate that only Statnett will be entitled to own the offshore grid.
- The Ministry will assess and possibly propose necessary legislative changes and more detailed rules for efficient access to, and use, of the offshore grid. In our view, investments in offshore energy production clearly requires further clarity on these issues. Several models for third party access may be possible, considering comparable systems, and the chosen model may materially affect the feasibility and likelihood of future investments.
- Developers of offshore wind projects are expected to cover costs for necessary grid offshore, however, it remains unclear to what extent offshore wind developers will be required to cover the cost of necessary upgrades of the onshore transmission grid.
- The government will initiate a process for identifying new areas for offshore wind in Norway, and the process is expected to be completed in two years.
Already on Friday, the government will present its white paper on the long-term value creation from Norwegian energy resources. At the same time, guidelines for applying for licenses for offshore wind projects in Norway will be published. Stay tuned for more exciting updates!