It has now been decided that Ventyr will develop offshore wind in the Southern North Sea II. Equinor also participated in the auction.
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Today 10:13
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On Wednesday, Prime Minister Jonas Gahr Støre and Energy Minister Terje Aasland will present the results after Norway’s first offshore wind auction has been completed.
The company Ventyr won the offshore wind auction. This allows them to build an offshore wind power plant in the Southern North Sea II area, close to Norway’s sea border with Denmark.
– This is a milestone in the government’s offshore wind investment, says Energy Minister Terje Aasland.
Adventure owned by the sea window developer Parkwind, which again owned by the Japanese power company Jera, and by the Ingka group, which accounts for around 90 per cent of sales in the furniture chain Ikea.
According to Støre, Parkwind owns 51 percent of Ventyr, while Ingka owns 49 percent.
Ventyr will be able to get a maximum of 23 billion, in 2023 kroner, in government support over a period of 15 years.
– In Ventyr we have a very strong winner who I am sure will carry out the development on the shelf in a good way, says Aasland.
Parkwind has experiences from Belgian offshore wind farms such as Belwind from 2010, Northwind from 2014, Nobelwind from 2017, North Sea Wind from 2019, Northwester 2 from 2020, as well as German Arcadis Ost 1 from 2023. Jera is also an owner in The Formosa 2 project outside of Taiwan.
Here, Energy Minister Terje Aasland (Ap) follows the offshore wind auction. Photo: Ministry of Energy
– Henrykte
– We are delighted to have secured the winning bid for the Southern North Sea II project, says project director Jorne Bluekens in Ventyr, according to a melding.
Ventyr writes in the report that the first turbines are expected to be in operation by 2030. The company points out that it has a collaboration with the NorSea group, which is owned by Wilh. Wilhelmsen.
– We look forward to supporting the consortium, says John E. Stangeland in NorSea, according to the message.
– More power
The facility in the south of the North Sea is to be developed with bottom-fixed turbines, but at a greater depth than many other offshore wind facilities. The power cable to land will also be longer than for many other projects, about 200 kilometers.
The project will be able to deliver around six to seven terawatt hours (TWh) of electricity a year, which corresponds to about four percent of Norway’s electricity production.
– This means that we get more power into the southern part of the area, the NO2 price range, which needs more power to underpin the industrial and commercial opportunities that are there, says Aasland.
– I think this is also a big advantage for Norwegian consumers over time, he says.
Requires NOK 1.15 per kilowatt hour
The winning bid in the auction is 115 øre per kilowatt hour. The bid is stated in øre per kilowatt hour in 2023 kroner (1st quarter of 2023).
In months where Ventyr can sell its offshore wind for an average of over 115 øre per kilowatt hour, Ventyr will pay the excess to the state.
If the volume-weighted electricity price that Ventyr achieves is below 115 øre per kilowatt hour, the state will pay Ventyr so that they still receive 115 øre per kilowatt hour for the electricity.
To illustrate this with an example:
If Ventyr can sell its produced electricity for a year for a volume weighted average of 50 øre per kilowatt-hour, then the state must pay Ventyr 65 øre extra for each kilowatt-hour produced. Given seven terawatt hours of production a year, this would cost the state around NOK 4.5 billion.
This is how the electricity price and subsidy are calculated:
The support for the offshore wind power plant must be calculated every month.
The support is not based on the spot price in the NO2 price range where the electricity is brought ashore, but on a wind-weighted price.
This meant that both Ventyr and the auction’s loser, Equinor, could bid lower than if the support had been based on the spot price in NO2.
– Measuring against a monthly wind-weighted average instead of against the spot price for the month can have a positive, risk-reducing effect for developers of 10-20 øre/kWh.
That was estimated by power analyst Olav Johan Botnen in the analysis company Volt Power Analytics to E24 last summer.
Sea view
Equinor participated
Equinor confirms that the company participated in the auction.
– We participated in the auction with the aim of winning at a price level where we could develop a good and profitable offshore wind project. Now the result of the auction shows that another player has a lower bid than us and we have to accept that, says Pål Eitrheim, executive vice president for renewable energy at Equinor, in a comment.
– This is an important milestone for the development of offshore wind in Norway and will contribute to increased power production. Norway is still a strategically important market for us, and we are now looking at new offshore wind opportunities at home. We would like to congratulate Ventyr on the award, says Eitrheim.
Equinor has also previously taken part in auctions where others have been willing to go further, and has said that the company can afford to be disciplined. Equinor has a return requirement of 4-8 per cent on its low-carbon projects, and hopes to make good money from the business over time.
Pål Eitrheim is executive vice president for renewable energy at Equinor. Photo: Vidar Ruud / NTB
also read
Equinor did not win out in offshore wind auctions: – We see a high willingness to pay
These were current
Shortly after the auction opened on Monday morning, the Ministry of Energy confirmed to E24 that bids had been received.
After Germany’s Energie Baden-Württemberg AG (EnBW) and its subsidiary Norseman Wind withdrew just days before the auction, there were four potential bidders in the process:
- Aker Offshore Wind, BP and Statkraft
- Equinor and RWE
- Shell, Lyse and Eviny
- Ventyr (Belgian Parkwind, which is owned by Japanese Jera, and Ingka Group, which is Ikea’s parent company)
Prior to the auction, there was uncertainty as to whether any of the players would submit a bid.
Prime Minister Jonas Gahr Støre together with Energy Minister Terje Aasland. Photo: Terje Pedersen / NTB
Lyse, Shell and Eviny did not participate
The consortium consisting of Shell, Lyse and Eviny confirms that they did not participate in the auction.
The consortium still has faith in offshore wind, and wants to explore upcoming opportunities that can provide an acceptable balance between profitability and risk, he emphasizes.
Uncertain timeline
Energy Minister Terje Aasland acknowledges that it is demanding to get the plant completed by 2030, which has been the government’s goal.
– We must ensure that, through the decisions we can decide on, we will not delay the processes for the developer, he says.
He does not guarantee anything.
– 2030 is very close, says the energy minister.
Brakes and stops in projects
The offshore wind market has recently been under pressure from high price growth, high interest rates and restrictions in supply chains, which has particularly affected projects in the USA.
Players such as Equinor, BP and Ørsted have slowed down or stopped projects and taken large write-downs.
The UK has increased the cap on its offshore wind guarantees ahead of an upcoming auction. It is happening after an auction last year where no one submitted a bid. New York in the USA has also taken measures to ensure increased profitability for developers of offshore wind.
The offshore wind farm to be built in the Southern North Sea II area near the sea border with Denmark has a capacity of 1,500 megawatts. It can produce electricity of 6–7 terawatt hours (TWh) annually.
The major Swedish bank SEB believes this offshore wind project may require investments of close to NOK 80 billion, before operating costs.
The Norwegian government’s ambition is that by 2040 an area will be allocated for 30,000 megawatts (MW) of offshore wind production. If that happens, there is enough capacity to produce almost as much electricity as the entire Norwegian hydropower today.
Sea view