In the week that Norway’s Prime Minister is due to visit a major industry event to extol the prospects of floating wind, state owned oil group Equinor’s announcement that it’s putting on ice “indefinitely” one of the nation’s – and world’s – most ambitious projects was hardly ideal.
The Equinor-led 1-gigawatt Trollvind project was always seen as a tough ask for the fledgling floating industry not least because of its timing, with ambitions to have North Sea oil and gas operations receiving green power from its floating wind platforms (via a connection to shore and back) as soon as 2027.
According to Equinor itself, the decision “is based on several challenges facing the project, including technology availability, rising cost and a strained timetable to deliver on the original concept”.
None of those were invisible when the Trollvind plan was unveiled in June 2022, but the skies may have darkened enough for a subsidy-free project where time was of the essence to tip it over the edge of viability.
A spokesperson for Equinor when asked by Upstream's sister publication Recharge which “technology availability” issues were at play did not provide specific details but noted supply chain challenges that have already been cited by others in the industry as a looming issue for projects looking to get into the water in the late 2020s.
As for rising costs, David Linden, head of energy transition at Westwood Global Energy Group, said its latest inflation survey data on floating-specific responses “showed average increase across the range of costs (materials, labour, finance etc.) is 11–20%.... but for some costs have gone up by 40%.
“Essentially this means more fringe projects will get cut and portfolios will get reshuffled.”
Leo Bertels, managing consultant at BVG Associates, told Recharge: “The discontinuation of the Trollvind project is most likely due to the particular economics of oil & gas decarbonisation projects, for which it is imperative to get turbines in the water quickly due to limited lifetime of offtaker platforms.”
News of Trollvind’s apparent demise – at least for the foreseeable future – will inevitably turn the spotlight on other projects racing to decarbonise large scale oil & gas production before the end of the decade such as the winners in Scotland’s recent INTOG seabed leasing round.
It also follows several years in which the mood music around floating was all about growth, growth and more growth, with Trollvind in particular promising to quickly take floating gigascale without the step of the 300MW or so projects that were previously seen as the natural evolution from small early plants such as Equinor's own Hywind Tampen.
Trollvind's travails are the latest in a clutch of news that turns the focus on the challenges facing the nascent floating industry.
Reports from financial newswire Bloomberg last week suggested that Shell is looking to sell the Eolfi floating business it bought in 2019, a claim the oil & gas supermajor declined to comment on. Late in 2022 Shell withdrew from the Groix and Belle-Ile floating wind pilot in Brittany, France amid “technical, commercial and financial challenges, all in a context of constantly increasing costs and very strong constraints”.
Global renewables giant Mainstream has this year so far confirmed it will shelve floating wind ambitions in the US and Japan as part of a wider strategic review.
Analysts told Recharge, however, that Trollvind's setback and other reshuffling moves shouldn’t necessarily be seen as evidence of an industry-wide problem for the floating sector, but rather as reflecting individual circumstances.
BVG Associates’ Bertels said: “[For Trollvind] the economics of North Sea oil & gas decarbonisation was always going to be challenging, and Mainstream’s decisions look like part of a general strategic reorientation to focus limited resources on the most advanced projects by exiting crowded markets where progress has been slow.”
Linden said that Shell, if indeed it does slim its floating portfolio by disposing of Eolfi, would most likely be reacting to specifics in the French market and the individual business.
“Shell has floating projects in the UK and South Korea that offer greater scale and likely better commerciality. The Korean projects for example have already progressed further, as preferred supplier agreements have been signed with Vestas for the turbines.
“Outside of floating Shell is looking to deliver bigger fixed opportunities in North America, Brazil, Philippines etc. That is going to require a lot of effort to make happen,” said Linden.
As for Norway, industry group Norwegian Offshore Wind’s head Arvid Nesse said: "We are sorry to learn that the Trollvind project has been cancelled. Projects like these could provide valuable opportunities for the supply chain in the region.
“However, we are not concerned that it flags wider challenges within the floating sector. It does, though, emphasise the need for industrialising floating wind and reduce cost. Utsira Nord [Norway’s first floating tender] is well underway, and we are seeing promising technologies being developed for future floating offshore wind parks.
“We also need a predictable timeline for new projects, stating how much capacity will be auctioned in the next rounds. The industry needs this predictability to make the necessary investments required to deliver into these projects."
(This article was originally published by Upstream's sister publication Recharge)