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The Offshore Wind Test Facing Norway’s New Government

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The incoming government coalition in Norway will be tasked with delivering on the country’s long-standing offshore wind ambitions. The most important action: speeding up the project development timeline. 

In 2025, the Nordic nation, which prides itself on being an ocean and energy industry leader, will account for a mere 0.1 percent of the world’s offshore wind installed capacity.

On Monday this week, the center-right coalition led by Prime Minister Erna Solberg lost the general election. The Labour Party’s Jonas Gahr Støre will now form a new government. The outgoing Oil and Energy Minister Tina Bru from the Conservative Party deserve praise for opening up two zones for offshore wind development in the Norwegian part of the North Sea.

Ørsted, Vattenfall, RWE, Shell and Equinor are among the industry heavy-hitters that have made clear their intentions to bid for development rights. The government sent its so-called Guidance Note on a public hearing round over the summer. The regulatory framework is taking shape, but important elements, such as the permitting timeline, remain elusive.

The offshore wind industry naturally seeks a speedy process and a clear regulatory framework.

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Déjà Vu

In the late 2000s, politicians spoke enthusiastically about the global opportunities offshore wind would present for Norwegian industry, including jobs. What better candidate to lead the diversification from offshore oil and gas and shipping?

In 2008, the then-Oil and Energy Minister Åslaug Haga asked the Energy Council, made up of experts from among others Scatec, Statkraft and StatoilHydro (now Equinor), to propose a strategy for growing offshore wind into a significant Norwegian export industry.

The Council delivered a report that in hindsight offered a clear vision for the future of offshore wind globally and in Norway. Its main recommendation: create a home market by installing between 5 and 8 GW offshore wind in Norwegian waters between 2020 and 2025.

The government moved on to propose a Marine Energy Act. In 2009, I headed up an offshore wind development company, OceanWind. It is with a wry smile that I recently looked up OceanWind’s comment on the proposed act in April that year. Above all, we suggested to the government, make sure that the law is followed up ASAP with a regulatory framework and a permitting process.

Because, even with a fast-tracked process, “the first major offshore wind project in Norway may not be installed until 2019.”

It was not to be. Parliament did pass the Marine Energy Act in 2010. But during the 2010s, the build-out of lower-cost onshore wind and hydro power trumped offshore wind ambitions, even if these were oft-repeated.

In 2025, not 5 to 8 GW but only some 100 MW offshore wind, all of it floating, will be operational in Norway. The global installed capacity could reach 100 GW. Norway will thus make up 0.1% of the world’s offshore wind capacity in 2025. The first large-scale offshore wind project may or may not be put in Norwegian waters on this side of 2030.

Oil and Gas 36 Times Larger

The Norwegian offshore wind suppliers had total sales in Norway and internationally of NOK 11 billion (USD 1.3 billion) in 2019, the most recent figures available. By contract, the oil and gas suppliers achieved total sales of NOK 397 billion (USD 45.9 billion) that year.

The offshore wind industry is expanding. One indicator: the Norwegian Offshore Wind Cluster has grown to include more than 300 member companies, a near doubling from one year ago.

Still, measured by total turnover, Norway’s oil and gas industry was 36 times larger than its offshore wind counterpart.

The energy transition has some way to go.

Faster Development Pace

This, of course, is not a challenge unique to Norway. Unclear policy frameworks and slow permitting processes may be the single biggest hurdle to accelerating the build-out of renewable energy globally.

As the Global Wind Energy Council pointed out in its offshore wind report last week: “Governments and industry must continue to work together to significantly reduce the timelines for offshore wind projects.”

A greater sense of urgency is needed, quite simply. Writing in the Norwegian publication Teknisk Ukeblad last month, I proposed six steps for speedier project development processes, from time-bound targets and milestones to early data collection and stakeholder engagement. There is a lot to be learned from other offshore wind markets over the past 12-13 years.

Instilling that sense of urgency will be a real challenge for the yet-to-be-named new oil and energy minister.

In parallel, he or she will have to find common political ground. It is hard to see a route to market for the deployment of large-scale Norwegian offshore wind that does not include integration, including through subsea cable connections, with its European neighbors. Yet, one of the likely junior partners in Mr. Gahr Støre’s incoming government opposes such ties.

It is a big test but one that must be overcome if Norway is to finally deliver on its offshore wind ambitions.

 

A version of this article, written by Ivar Slengesol, TGS VP New Energy Solutions (E. Hemisphere) By Ivar Slengesol, VP New Energy Solutions Eastern Hemisphere, TGS ASA, and member of the Norwegian Offshore Wind Cluster steering committeewas first published on the RECHARGE website on 14 September 2021: https://www.rechargenews.com/wind/norways-next-government-can-finally-deliver-on-countrys-offshore-wind-ambitions/2-1-1067353
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