A report published by Export Credit Norway says the Norwegian state should invest in developing multiple floating offshore windfarms in its waters to secure export orders and tap into the vast potential of the floating offshore wind market
The report said the planned Hywind Tampen project should not be a ‘one-off’ but the beginning of widespread use of floating wind in Norwegian waters.
The study was commissioned by Export Credit Norway (Eksportkreditt Norge), ABB, Kvaerner, the Norwegian Shipowners Association and MacGregor.
Eksportkreditt director of strategy and business development Ivar Slengesol said the report, prepared for Eksportkreditt by Rystad Energy, analysed whether the state should spend money to create a domestic market for floating wind – and lay the foundations for a potentially large export industry – or wait for the floating wind market to mature and hope that Norwegian suppliers secure contracts, using experience already gained from projects such as Hywind Scotland and the planned Hywind Tampen windfarm.
Mr Slengesol said the industry “wants the first alternative” and the Norwegian Shipowners Association, Norsk Industri and leading suppliers such as Aker Solutions all believe that a domestic market is needed “to build a new, powerful industry and export jobs.”
The report focused on using floating windfarms to provide power to offshore oil and gas platforms to reduce emissions. It compared using floating wind with other alternatives, such as electrification from shore. In the longer term, however, using floating windfarms in this way would help Norwegian companies secure export opportunities for floating wind for a range of applications, not just oil and gas.
Rystad Energy analysed a range of options to link floating offshore windfarms to oil and gas platforms in four areas on the Norwegian continental shelf: the southern North Sea, central North Sea, northern North Sea and Norwegian Sea.
It found the northern North Sea is most suited to applying large-scale floating windfarms – of around 500 MW each – and that low-cost capital combined with what it described as “an investment-friendly fiscal regime” would make the plan commercially viable.
As floating wind costs fall, said the report, the construction of more floating windfarms in the 500-MW size range could be triggered, although electrical connections to shore would also be required in some cases.
Apart from reducing emissions from offshore oil and gas and creating export opportunities and jobs, the report evinced 10 reasons for developing offshore wind, not least that offshore wind technology is “highly competitive” as an energy source and cost trajectories of floating and bottom-fixed wind are expected to converge during the 2020s.
Reasons cited include Norway’s offshore wind resources – “Norway has excellent offshore wind resources, mostly deeper than 60 m, which precludes bottom-fixed turbines,” the report said – and that electrification from the shore requires more power overall.
Other reasons include helping Norway meet near-zero emissions targets in 2050, the fact oil and gas facilities ‘are large emission point sources’ but at the same time are located in areas with excellent wind conditions, and a desire for Norway to be a ‘global catalyst’ for commercialising floating offshore wind, as other countries have been for solar PV and bottom-fixed offshore wind.
Last, but by no means least, floating offshore wind is a ‘good match’ for Norwegian suppliers which the report said are “very well positioned to reap the benefits of industrialisation of floating offshore wind,” and that the offshore oil and gas industry needs to diversify.
“A considerable home market will improve the odds of establishing a new export industry in Norway, as export revenues from oil and gas decline,” Rystad’s report said, noting that Norwegian companies could, potentially, secure a 20% share of the market.
A total of around 23 TWh of electricity would be required to fully electrify the Norwegian Continental Shelf (NCS), said the report. The power demands of oil and gas platforms are highest in the northern North Sea. NCS facilities could, theoretically, absorb nine windfarms delivering 4.5 GW of capacity.
Industry estimates for the cost of floating wind by 2030 range from €40 (US$44) to €70 MWh (US$78). Industry cost estimates that Rystad gathered put the cost of the first large floating windfarm (500 MW) at €115 MWh.
Backing up the findings of the report, WindEurope said, “Norway has a head start in floating wind technology. Equinor has developed the world’s only fully operational floating offshore windfarm, in Scotland.
“This means huge market opportunities, but fully exploiting this opportunity will require establishing a strong domestic market. It is therefore crucial that Norway starts moving quickly on large-scale floating domestically. This is critical for the development and support of the national supply chain.”
WindEurope said that, to finance large-scale floating windfarms, two-sided contract for difference financing should be introduced. “This will help keep financing costs to a minimum,” it said, “which is particularly important given how capital intensive these projects are.
“Projects such as Hywind Tampen prove that floating wind is a viable technology already and that it is ready to be rolled out on a large scale,” it said. “Costs have dropped by 40% compared to its predecessor Hywind Scotland.”