The Sørlige Nordsjø II offshore wind farm will require investments of close to 80 billion, predicts a major Swedish bank. The energy minister still believes in a bidding war for the right to build out.
Energy Minister Terje Aasland has received seven applications for Norwegian offshore wind. From them he must subtract two who are unlikely to qualify. Then he may have to subtract two more who are unlikely to bid. Photo: Dan P. NeegaardPublished:
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On a energy conference at Lysebu there was a vote on Thursday morning: Those who thought that an auction would be held this winter to develop the offshore wind farm Sørlige Nordsjø (SN II), should raise their hand.
Only the organizer Fornybar Norges folk raised their hands in the air. The many investors and bankers present sat with their hands in their laps.
It might not be so strange.
The major Swedish bank SEB believes that SN II may require as much as 7 billion euros (close to NOK 80 billion) in investments.
In addition, there are operating costs.
The state subsidies can amount to a maximum of NOK 23 billion over a period of 15 years.
Pointing to Equinor
SEB’s head of project financing in Norway, Simon Joneklav, believes that the government subsidies will be too low for the project to be financed with a high proportion of project loans from banks. The risk in the project is too great for that.
– Then it will be cheaper to finance the development from their own balance sheet, for those companies that are large enough to do so, says Joneklav.
Seven groupings have indicated their interest in bidding for SN II (see fact box further down). The banker points to the listed, state-owned giant Equinor as perhaps the only one of the seven that can manage such a lift without a lot of project financing.
The two heads in the first row both turned and looked further into the hall when Energy Minister Terje Aasland (th) from the stage of the Oslo Energy Forum addressed two “gentlemen” with the hope that they will bid for offshore wind. Photo: Roar Valderhaug
Was pointed at, turned around
One and a half kilometers further south as the crow flies, another energy conference was held on Thursday, Oslo Energy Forum.
Here too, Equinor was pointed to, literally.
When asked by conferee Siri Lill Mannes about Energy Minister Terje Aasland’s belief that there will be an auction for SN II, he addressed two gentlemen in the front row. It was CEOs Anders Opedal in Equinor and Christian Rynning-Tønnesen in Statkraft.
– I’m looking towards the gentlemen down here, sa Aasland.
But both Opedal and Rynning-Tønnesen then turned synchronously and looked further back in the hall. With some humor the two signaled that they apparently wondered who Aasland was talking about?
In the hallway with Aasland
– There is nothing new to report, says Rynning-Tønnesen to E24, whether the group that Statkraft is part of has decided to bid or not.
– Aasland took you out into the hallway after his performance on stage?
– It was about something completely different, replies the Statkraft boss.
Rynning-Tønnesen mentioned as recently as January this year that SN II is a “marginal project” in which it was difficult to find profitability.
Bid favorite Opedal, for its part, rejects that Equinor has already decided to bid.
– We haven’t decided anything yet. This is a board decision. It will only be taken when we have received an invitation and everything is in place, says Opedal.
Opedal has just seen the stock market value of Equinor fall by many tens of billions of kroner because the stock market does not like his plans to invest heavily in renewable energy.
The applicants for Norwegian offshore wind
The groupings with companies that have applied to be so-called prequalified to bid to develop Sørlige North Sea II are:
- Equinor and RWE
- Norseman Wind
- Parkwind and Inga
- Shell, Lyse and Eviny
- Statkraft, Akers Mainstream Renewable Power and BP
- Hydroelectric Corporation
- Mingyang Smart Energy
The first five will by all accounts be prequalified, the last two not.
Of the five which are prequalified, it is highly uncertain whether the groupings of Statkraft and Shell respectively will bid.
Aasland risks to end up with at best only three groupings eventually bidding.
Sea view
I think it will go well in the end
Although almost no one at the energy conference at Lysebu thinks there will be an auction, and the stock market is unlikely to like Equinor bidding, Aasland is still optimistic.
– There is no reason to be pessimistic about the development of Norwegian offshore wind. We have received seven applications to be prequalified for SN II. There are several strong consortia that I expect will participate in the auction, says Aasland to E24.
People in the energy industry have expressed to E24 that the 23 billion in state subsidies for the development of SN II should perhaps rather be spent on the next large offshore wind farm, Utsira Nord.
It will be developed with floating wind turbines, and will probably require at least NOK 50 billion in state subsidies. It is on floating offshore wind that Norway has the greatest potential for building up a new industry.
Aasland rejects the idea of now betting everything on Utsira Nord.
– We must be predictable when it comes to our approach to offshore wind. We will succeed in that, and SN II is the first starting point. I want to implement it, says Aasland.
2024-02-15 21:01:13
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