Norway to Award Offshore Wind Areas Next Year as Government Awaits Subsidy Scheme Approval

August 10, 2023, by Adrijana Buljan

The Norwegian Ministry of Petroleum and Energy has pushed back the deadline for applications in the country’s first offshore wind tender by two months as the government is waiting to obtain approval for state aid from the EFTA Surveillance Authority (ESA). This will also postpone the award of the offshore wind areas to 2024.

The Norwegian government officially opened the application window for Norway’s first offshore wind auction on 29 March, offering a combined capacity of 3 GW across two areas, 1.5 GW at Southern North Sea II (Sørlige Nordsjø II) and 1.5 GW at Utsira Nord.

The deadline for applications was set for 1 September and the winners of the first offshore and floating wind sites were expected to be announced by the end of this year.

However, as the Norwegian government needs to have ESA’s approval of the subsidies that the offshore wind projects will be awarded, and as it is anticipated that it may take some time to obtain the approval, the application deadline has been moved to 1 November.

This also means that the allocation of the first offshore wind areas will take place in early 2024.

Subsidising offshore wind in Norway will be the first time this type of projects is treated according to CEEAG (Guidelines on State aid for climate, environmental protection and energy), which came into force in 2022, the Ministry of Petroleum and Energy says.

According to the ministry, which has been in dialogue with ESA, after the talks the two parties had this summer, it became clear that it would take somewhat longer than expected to get the approval.

The ministry noted that, if the ESA process does turn out to take longer, it would be “unfortunate” to receive applications by the originally set deadline of 1 September and, in order to ensure that the developers have all the information they need to be able to submit an application, it has been decided to postpone the application deadline until 1 November.

The rights to develop the first, 1.5 GW phase of the Southern North Sea II will be awarded to one candidate through a pre-qualification round followed by an auction and award of the site. The minimum capacity proposed must be 1,400 MW, and the maximum capacity 1,500 MW, with a minimum of six and a maximum of eight bidders that will be cleared to participate in the auction.

The Southern North Sea II tender is based on the so-called English auction model, with the bidder with the lowest bid price (NOK øre/kWh) to be selected.

The 1.5 GW of capacity at Utsira Nord will be awarded to three bidders through a competition based on qualitative criteria which will, among other things, facilitate innovation and technology development in floating wind. The minimum capacity of individual bids for Utsira Nord must be 460 MW, and the maximum capacity 500 MW.

Two of the three floating wind projects at Utsira Nord will be awarded state aid and an option to increase the capacity of the projects to 750 MW, and will sign a 15-year Contract for Difference (CfD) with the government. The project that will not be offered state aid will retain the right to the area for a period of time, can make use of the general instruments, and will be able to participate in any future competitions including for state aid for offshore wind.