The government’s internal disagreement over hybrid cables aside, Norway will later this year launch its first tender for bottom-fixed offshore wind turbines in the North Sea.
In a speech delivered on 9 February 2022, the Norwegian government presented its plans to launch the first phase of Norwegian offshore wind development. At the same time, the Ministry of Petroleum and Energy released a consultation paper with its proposal on how to divide the two open areas Sørlige Nordsjø II and Utsira Nord into multiple license areas.
The proposal and the following public consultation are the first steps of the process leading up to the award of licenses in the two open areas. The Ministry’s announcement of areas, which will take place after the public consultation process, is a prerequisite for starting prequalification processes and auctions/competitions for exclusivity, which in turn can result in the award of licenses. The consultation deadline is due 29 April 2022.
In assessing how to divide the two areas into smaller license areas, the Ministry has balanced multiple interests, such as environmental concerns, other industries’ needs (fisheries, oil and gas), the needs of the Norwegian military defence, the maritime traffic/safety in the area and the preservation of cultural monuments. The expectation is that the public consultation process will unveil additional concerns that need to be assessed before the final announcement of areas can be made.
We particularly note the Ministry’s warning that there is limited environmental data available for the open areas, especially Utsira Nord, and that therefore developers are expected to take into consideration environmental information that becomes available during the development process, potentially affecting the planned development. To alleviate this uncertainty, the Ministry emphasises that the license areas should be large enough to allow for flexibility with respect to the exact positioning of the turbines.
The Ministry has not accommodated the industry’s request for an increase of maximum installed effect, as this is expected to increase the degree of utilisation of area – despite the industry’s ambitions of efficiency improvement by technology development. To increase the maximum capacity limits, the Ministry asserts that a new impact assessment will be required. No such impact assessment is initiated at this point in time.
Sørlige Nordsjø II, the area where bottom-fixed turbines are feasible, will be divided into three areas, but only two of them will be available for development, presumably due to the area limit of 3000 MW. The two license areas will be developed in two phases, one of which will be made available in the first phase (maximum installed effect 1500 MW).
The Government has for phase 1 not provided any kind of reassurance to investors and developers hoping for hybrid cables - the political conclusion is that phase 1 will only see onshore connection to Norway. The decision on phase 2 (another 1500 MW) and any future possibility of connection to other electricity markets, will have to await a whitepaper from the Norwegian Water Resources and Energy Directorate (NVE) in cooperation with Statnett. This is due for delivery 1 October 2022.
The government further announced that phase 1 will be made subject to an auction process, which is reiterated to be the preferred option for awarding offshore wind licenses. This is contrary to the qualitative approach which most of the actors argued in favour of in last summer’s public consultation on proposed guidelines for offshore wind. The Ministry of Petroleum and Energy will start the preparatory legislative process for the auction process based on said public consultation. The intention is to present a proposal for the first phase of Sørlige Nordsjø II to Parliament at some point during spring 2022, i.e. in parallel with the public consultation process on the division of license areas for project development.
The Ministry has also proposed division of license areas in Utsira Nord (floating turbines). It appears quite promising that Utsira Nord has been included, as it indicates that this area may be earlier in the process than anticipated, but no further clarity was provided for the process and applicable criteria. For Utsira Nord the Ministry proposes two alternatives: Either four license areas – two larger (500 MW each) and two smaller (500 MW in total), or three license areas – two larger (600 MW each) and one smaller (300 MW). The industry is asked to give its views on which alternative that is the preferred.
The government took the opportunity to emphasise the monumentality of the start of the Norwegian offshore wind undertaking, and perhaps the best news was that further areas will be considered for development. The Ministry has in a letter to NVE requested a proposal for new sea areas that can be made available for offshore wind development, and the work on identifying such areas is expected to be completed in 9-12 months. After that, impact assessments will have to follow before the areas can be opened for development and subsequently be divided into license areas.
Press release from regjerningen.no
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