Offshore wind for close to 85 billion in 2050 – NRK...

On Tuesday, Menon Economics presented a new report on measures to realize floating offshore wind on the Norwegian shelf.

The report was commissioned by the Norwegian Offshore Wind Cluster in collaboration with Norwegian Industry, the Norwegian Shipowners’ Association, Export Credit Norway and Stavanger Municipality.

The report states that in a high scenario, a Norwegian-based offshore wind industry will potentially have a turnover of close to NOK 85 billion in 2050.

Asgeir Tomasgard is a professor at NTNU. He says the turnover for the Norwegian offshore wind industry may be less, or more, than what is estimated in the report.

Can be more, can be less

How much is developed in the North Sea depends on two things, says Tomasgard. How large a volume you get, and how active Norwegian business and Norwegian politicians are in the development.

– Turnover can be either higher or lower, depending on how low costs and how high volume is produced by Norwegian players, says Tomasgard.

To NRK, he gives an optimistic and a pessimistic estimate. The pessimistic, 40 gigawatts, we provide production that approaches the energy volume produced in Norwegian hydropower.

The optimistic, 400-500 gigawatts, is in line with the EU’s ambitions for development in the North Sea, he explains.

– I think a very important criterion for how large the volume will be, is Norwegian policy on the development of the North Sea area, and whether Norway will take an active part in the North Sea cooperation that is being established on offshore wind. Another important criterion is how well the interaction between research and industry to reduce the costs of offshore technology, says Tomasgard.

– This can be the main foot

Ole Sandvik is head of the offshore shipyard Aibel, which has had a focus on oil and gas. As of today, Aibel has a third of the portfolio in offshore wind, Sandvik says.

He estimates that offshore wind will account for more than half of the turnover in the years to come.

– It is clear that this can be our main footing to stand on in the future, there is no doubt about that, he says to NRK.

At the conference, Strategy Director Ivar Slengesol in Eksportkreditt says that the analysis shows that the renewable energy industry has great potential in Norway. He wants a sector agreement for offshore wind.

– I believe that a sector agreement will be able to gather the threads here and get a common thread from research, development and innovation, over to export, scaling, get more store, Slengesol says.

Slengesol is asked if he thinks the government’s investment in offshore wind is still shaky, something he has stated before.

– It is not just this government, you can bring the previous government and, says Slengesol, and says there has been too little offshore wind investment since 2008.

– There has not been a common thread here. There has been a lot of investment in research and development, but we have not been able to take that promise to a domestic market and the export industry. A lot is happening positively, but when the difference is 57 times between offshore wind and oil and gas, that difference must be much smaller, he says.

Need a guiding business policy

The Labor Party’s energy policy spokesman Espen Barth Eide tells NRK that an active state is needed to facilitate the Norwegian offshore wind industry.

– We need a much more directional business policy that ensures that patient and risky capital comes in early, that ensures that there is a clear licensing regime, and that ensures that incentives and research and development funds are set up to promote this, says Eide.

Minister of Petroleum and Energy Tina Bru is surprised that Eide demands a more directional business policy than the government has:

– I think it is strange to think that opening up areas, making regulations, creating the framework that is needed for this to become an industry in Norway. If this is not an active policy for it, then I do not know.

The report describes the changes that have taken place in the market over the past year and what significance these changes may have for the future prospects in the industry.

The report shows, among other things, that projects are being realized on a larger scale than previously assumed, which will contribute to a faster cost reduction.

Increases by 40 percent

This in turn could lead to an increased production capacity by 40 percent in 2050, compared to figures from 2019, according to Menon.

– The report points out that we must quickly succeed in scaling up capacity. We have great faith that the report can contribute to the government following up with attractive framework conditions for offshore wind in Norway as well, says CEO Harald Solberg of the Norwegian Shipowners’ Association.

The report includes a socio-economic assessment of which instruments are best suited to trigger private investments in large-scale floating offshore wind on the Norwegian shelf.

The choice of award criteria is pointed out as an important tool.

– The Norwegian Shipowners’ Association is very concerned that the framework conditions the government lands on, ensure healthy competition and a broad diversity of players on both the investor and supplier side, says Solberg.

Still an immature market

Chief analyst Thina Saltvedt of Sustainable Finance at Nordea calls the report exciting.

– This with floating offshore wind is exciting for Norway because no one has taken that market, it is very immature, Saltvedt says to NRK.

Saltvedt says 85 billion is a high number, but is also optimistic about the future of the offshore wind market.

– It is difficult to be able to have a very concrete picture of what the future looks like in the long run. The reason why I am optimistic is that very many countries want a faster transition from fossil to renewable, and wind power is an important focus area.

– Norway has been a bit late in participating in the offshore wind that is based on the bottom, so I also think that if we want to be in a leading position on a global basis, then you have to start now. Increased interest in many places and a faster reduction in costs means that optimism increases, says Saltvedt.