Norway Greenlights EUR 2 Billion Offshore Wind Contract for Difference Scheme

December 20, 2023, by Adnan Durakovic

Norway has received clearance for up to NOK 23 billion (EUR 2.04 billion) in state aid in the form of a bilateral Contract for Difference (CfD) for the Southern North Sea II (Sørlige Nordsjø II) offshore wind farm project.

Norwegian Ministry of Petroleum and Energy

The CfD will be in place for a period of 15 years. The state aid was approved by the EFTA Surveillance Authority (ESA), the body monitoring compliance with European Economic Area (EEA) rules in Iceland, Liechtenstein, and Norway.

”ESA’s approval has been an important prerequisite for us to be able to auction off a project area and provide state support for an offshore wind project in the Southern North Sea II. I am happy that this is now in place, and would like to thank ESA for a good process,” said Norway’s Oil and Energy Minister Terje Aasland.

Back in November, Norway’s Ministry of Petroleum and Energy received seven applications to participate in the auction to develop an offshore wind farm with a capacity of between 1.4 GW and 1.5 GW in the Southern North Sea II zone.

The rights to develop the first phase of the Southern North Sea II will be awarded to one candidate through a pre-qualification round followed by an auction and award in 2024. Currently, the tender has a “tentative deadline” of February 2024.

The tender documents say that the ministry intends to prequalify a minimum of six applicants. If fewer than six applicants can be prequalified, the ministry will assess whether the auction should be carried out.

The ministry is now assessing the applications that have been received, and will announce as soon as possible which applicants are qualified to participate in the auction.

The Southern North Sea II tender is being carried out using the so-called English auction model, with the bidder with the lowest bid price (NOK øre/kWh) selected.

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 and 1.5 GW at Utsira Nord.