Norway Postpones Floating Wind Tender to 2025 as Gov’t Establishing ‘Common State Aid Model’

March 25, 2024, by Adrijana Buljan

The award of 1.5 GW of floating wind capacity in Norway, which was planned for this year, will be held in 2025 as the Norwegian government plans to have the subsidy model in place and announced before allocating the Utsira Nord (Utsira North) offshore areas for development.

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Subsidy model approval from ESA for the Southern North Sea II tender came in December 2023.
Application deadline for Utsira Nord was further postponed in October 2023.
Norwegian government plans to establish a ‘common state aid model’ for floating wind areas.

Image: Norwegian Ministry of Petroleum and Energy

The government says the decision to establish and notify about “a common model for state aid” for Utsira Nord before project areas are awarded is based on the dialogue with the European Free Trade Association’s (EFTA) Surveillance Authority (ESA).

Norway’s Minister of Petroleum and Energy, Terje Aasland, said on 22 March he hopes to have the notice to ESA on the common state aid model for Utsira Nord approved before the turn of the year and to make all the arrangements to allocate the areas next year.

There will be a joint notification for Utsira Nord and the areas that are relevant for floating offshore wind in the 2025 round, according to the Ministry.

The government says issuing the notice on the state aid model before project areas are allocated will provide better predictability as all necessary clarifications will be in place before the award of development sites, as well as legal certainty for the applicants that the allocation model is valid.

The talks between the Norwegian government and ESA on the country’s offshore wind subsidy schemes have been ongoing since last year for both the Southern North Sea II (Sørlige Nordsjø II) tender for fixed-bottom offshore wind projects and the floating wind tender for the Utsira Nord areas.

For the Southern North Sea II tender, the government got the state aid scheme approval from the ESA in December 2023. The competitive tender for pre-qualified developers was launched after that, with the winner announced earlier in March 2024, later than the originally planned end of 2023.

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Initially, when the tendering process was launched in March 2023 with the opening of the application period to qualify for the tenders, the deadline for applications for both Southern North Sea II and Utsira Nord was set for 1 September 2023 and the winners were expected to be announced by the end of last year. However, the tenders were postponed in August 2023 as the government had to wait to obtain approval for state aid from the ESA.

In October 2023, the Norwegian government announced changes to the call for the Southern North Sea II tender, prior to receiving ESA’s decision, saying these were necessary for ESA to be able to quickly approve that state aid be awarded and would avoid delaying the process for allocating the areas. The application date in the updated call was then set to 15 November 2023 and, as already mentioned, ESA approved the Contracts for Difference (CfD) scheme for the fixed-bottom tender in December 2023.

In the same notice as for the changes to the Southern North Sea II call, the government also said the deadline for applications for Utsira Nord was postponed and the aim was for a new application deadline to be set sometime in the first quarter of this year.

While the tender for fixed-bottom offshore wind capacity at Southern North Sea II was based on the CfD model, the capacity at Utsira Nord will be awarded through a competition based on qualitative criteria which will, among other things, facilitate innovation and technology development in floating offshore wind.

“In the call for proposals for project areas in Utsira Nord, the model is such that project areas are to be allocated based on qualitative criteria and that competition for state aid is carried out at a later stage as part of the licensing process. The ministry wishes to spend some more time with ESA and the European Commission to gain sufficient security that these three areas can be awarded based on qualitative criteria with a competition for state aid at a later date, as the government has proposed. This must be clarified before the ministry can receive applications for project areas,” the Ministry of Petroleum and Energy said in October 2023.

According to its latest press release on the Utsira Nord process, issued on 22 March 2024, the government also wants to set a solid foundation for floating offshore wind reaching beyond the 1.5 GW that will be awarded in the first floating wind tender, so there will be a joint notification on the common state aid model for Utsira Nord and the floating wind areas that are planned to be awarded in the 2025 round.

As reported throughout the last year, Norway has identified 20 new areas for offshore wind development on the recommendation of the country’s Water Resources and Energy Directorate (NVE). In September 2023, the government commissioned NVE to carry out strategic impact assessments of three offshore wind areas that may be opened and put out to tender in 2025.

For the tendering round in 2025, NVE has recommended that the already open areas Southern North Sea II and Utsira Nord be expanded with two areas named Sørvest F and Vestavind F. In addition, the government plans for a strategic impact analysis to also be undertaken for a third area, Vestavind B.