Norway launched early on Monday local time its debut offshore wind auction, targeting up to 1.5 gigawatts (GW) of power capacity in the North Sea south of its coasts.
“I hope for a good auction with several strong players who want to develop offshore wind at Soerlige Nordsjoe II,” Astrid Bergmål, State Secretary in the Norwegian Energy Ministry, told Reuters ahead of the auction start on Monday.
Norway, whose first area up for grabs for offshore wind development, Soerlige Nordsjoe II, is close to Denmark, proceeded with its first such auction despite the challenges the industry has faced over the past year, due to soaring costs and higher interest rates.
Last month, the Norwegian Energy Ministry said that five applicants had been approved to take part in the bidding—a consortium of Aker Offshore Wind, BP and Statkraft, one composed of Equinor and RWE, Norseman Wind of Germany’s EnBW, a consortium of Shell, Lyse and Eviny, and another group, Ventyr, which consists of Parkwind and Ingka.
Early this month, EnBW pulled out of the auction, citing limited state support and requirement for successful bidders to build and own the transmission connectors, Renews reported.
The offshore wind industry has seen several major setbacks since last summer—auctions in the U.S. and the UK were a flop and a large UK project was canceled due to surging costs and challenging market conditions pressuring new developments. Meanwhile, developers in the U.S. are seeking looser requirements for tax credits to make projects economically feasible and some are abandoning offshore wind projects on the U.S. East Coast.
Last month, Orsted, Siemens Energy, and Vestas – the three biggest wind power developers and turbine makers in the world – warned that last year’s challenges in the industry would continue this year and suspended dividends as they look to return to profitability and reduce costs.
The wind industry, especially offshore wind, was plagued in 2023 by cost increases, rising interest rates, quality issues with turbines, and delays and cancelation of projects. The new year will not fix all those challenges immediately, the three companies say, still expecting losses and uncertainty in 2024.
By Charles Kennedy for Oilprice.com
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