Norway's plans to open up two areas for some 4.5 gigawatts of large-scale offshore wind development have drawn interest from Norwegian and international companies, setting up a potential battle between oil companies and renewable energy companies.
The nation aims to open the Utsira Nord and Sorlige Nordsjo 2 licence areas from January 2021 to bidding for offshore wind development.
Norway-based oil companies Equinor and Aker BP confirmed to Upstream that they intend to be involved in the contest for the offered acreage licences.
An Aker BP spokesman stressed that the company will not apply for acreage but said it could be involved through cooperation with its sister company, Aker Offshore Wind, which would operate the possible licences.
Upstream has also learned that Danish wind-power giant Orsted is interested in the Norwegian licences.
Aker Offshore Wind has ambitious plans for developing the new offshore wind areas. Through a partnership with Aker BP, the companies aim to speed up efforts to industrialise floating wind power in Norway. Their goal is to develop solutions that can supply power to both existing and new oil and gas platforms, an Aker BP spokesman said.
“Aker Offshore Wind will develop the wind parks, while Aker BP will – as operator of platforms – purchase clean electricity to reduce emissions from our offshore installations,” he said.
Aker BP and Aker Offshore Wind also plan more innovative solutions from offshore wind in these two areas.
“In stages, the two projects being developed, Sonnavindar (1.2GW) and Vestavindar (500 megawatts), seek to realise visions of power hub infrastructure and an energy island for power export to continental Europe, production of hydrogen and ammonia, and charging stations for renewable shipping,” an Aker Offshore Wind spokesman said.
At Sorlige Nordsjo 2, Aker BP's Valhall platform is intended to be an energy hub, while the Vestavindar project is intended to supply the future North of Alvheim processing platform and other fields being developed in this area.
“Scale is essential for realisation of wind-power parks. It is therefore necessary to co-operate with as many partners and installations in order to succeed,” the Aker BP spokesman said.
Building on momentum
Equinor wants to contribute in developing opportunities for offshore wind in Norway, an Equinor spokesman said. The company aims to build further on the momentum it is seeing with the 88MW Hywind Tampen project, 11 floating wind turbines which will be tied to the Snorre and Gullfaks oil platforms in the North Sea, he said.
Equinor’s spokesman told Upstream that the floating offshore wind park at Utsira Nord and the (most likely bottom-fixed) Sorlige Nordsjo 2 wind park are interesting areas for the company.
“Going forward, we will work on identifying potential business cases, and thereafter consider whether we should apply for acreage within these two sites," he said. "Understanding potential framework conditions and ability to ensure co-existence with fisheries are two of the key elements in this assessment.”
Aker Offshore Wind and Equinor both declined to provide further details about their applications or possibility of partnerships with other companies.
Several companies from Norway and abroad have shown interest in the licence areas, according to a Ministry of Energy and Petroleum spokeswoman.
“However, it is too early to say how many will apply,” she said.
Denmark-based Orsted would need to partner with another company for the Utsira Nord licence since the company has little experience with floating offshore wind, said a source familiar with Norway's offshore wind plans.
In September, Orsted's departing chief executive Henrik Poulsen told reporters: “We're closely monitoring the floating offshore wind market.”
Poulsen plans to step down in January 2021. Mads Nipper will become the new Orsted chief executive.
An Orsted spokesperson declined to discuss potential interest in Norwegian offshore wind power with Upstream.
Framework conditions for the Norwegian offshore wind development areas are not yet clear.
The Norwegian Ministry of Energy and Petroleum spokeswoman said the state would be area manager, licencing authority and provider of financial support, three roles which would need to be co-ordinated.
She underlined that Norway has established several programmes for project support through the governmental funding entities Enova, Innovation Norge, Siva and different programmes through Norway’s Research Counsel.
The market for floating wind is at an early stage, which means involvement and financial support from government is necessary, said the Aker Offshore Wind spokesman.
Industrial consensus growing
The Norwegian industrial consensus on offshore wind has been growing for some time. In a 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 – offshore and floating wind power were put together with carbon capture and storage (CCS) and hydrogen at the heart of a plan to spearhead Norway’s energy transition towards “near zero” emissions levels by 2050.
As much as 3.4GW of offshore wind could be turning off Norway by the end of the decade as the country ramps up plans to electrify its oil and gas production platforms to cut emissions. But permitting issues thrown up by stakeholders in several of the areas marked out earlier this year for development could “bottleneck” construction timelines, according to research from Aegir Insights.
The consultancy, which calculates that the Utsira North and Sorlige Nordsjo 2 offshore blocks could be developed for under €90 per megawatt hour ($107/MWh), said with the “magnitude of floating build-out still uncertain”, longer-term interest in the development of offshore wind will be “dependent on state subsidies to keep projects profitable”.