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(Bloomberg) —
Equinor ASA, BP Plc and Shell Plc were among companies that were selected to take part in an auction for Norway’s first fixed-base offshore wind farm at a time when soaring costs are hampering the viability of the country’s 30 gigawatt wind ambitions.
The auction will be “an important step along the road to offshore wind realization in Norway,” Energy Minister Terje Aasland told reporters on Friday. The five companies that are due to take part “are well-qualified to follow through and build this out. We expect those that are now pre-qualified to do what they need to in order to participate in the auction.”
Energie Baden-Wuerttemberg AG-backed Norseman wind, Statkraft AS, RWE AG, Parkwind, and Ingka, the investment arm of Ikea’s biggest retailing group, were among the other companies chosen. Hydroelectric Corporation and China’s Mingyang Smart Energy won’t be taking part in the auction.
Norway’s ambition to translate five decades of developing oil and gas fields in the North Sea into success in the offshore wind industry comes at a time when wind developers and suppliers worldwide are struggling to make new projects profitable. The goal is to cover some 15,000 square kilometers (3.7 million acres) of Norway’s sea area by 2040, producing the same amount of energy as its vast existing hydropower output.
The country’s first offshore wind auction for the Southern North Sea II development will open March 18 and will follow an English model, where bidders compete for state support by submitting increasingly lower bids until one remains, the ministry said. The winner must sign a binding contract within four weeks of the auction being completed or pay a 400 million kroner ($38 million) fine.
The government has set an upper limit of 23 billion kroner over 15 years to support development of the project. The investment needed to build it could exceed 80 billion kroner, E24 reported Friday, citing SEB’s head of project and infrastructure financing Simon Joneklav.
© 2024 Bloomberg L.P.
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