Offshore wind: the Norwegian government announces competition for offshore wind at Sørlige Nordsjø II and Utsira Nord

The application deadline for Sørlige Nordsjø II is set to August 4th 2023 and 1st September 2023 for Utsira Nord. Allocation of the areas will be completed by the end of 2023.

The key elements for the competition are summarised below.

Sørlige Nordsjø II

Production of energy at the first phase of Sørlige Nordsjø II is opened for competition with a minium capacity of 1400 MW and a maximum capacity of 1500 MW. One actor will be awarded the area based on a pre-qualification round and a subsequent auction.

The pre-qualification criteria are:

• Execution ability, emphasizing a mature project plan, sufficient project financing, competence and financial strength. Execution ability will be weighted at 60%.
  
  
• Sustainable development of the offshore project that safeguards coexistence and minimizes consequences for the climate. Sustainability will be weighted at 20%.
  
  
• Positive local ripple effects for industry development, showing how the offshore prosject will contribute to increase competence and development of supply chains. Positive local ripple effects will be weighted at 20%.

Among the actors fulfilling the minmum criteria, the Ministry of Petroleum and Energy will pre-qualify minimum six and maximum eight actors to participate in the auction. The actor with the lowest bid-price will be awarded a time limited exclusive right to the project area and can apply for a license pursuant to the Offshore Energy Act section 3-1.

The proposed model for state funding is based on a two-sided contract for difference with a reservation price and a capped amount. The contract will have a funding period of 15 years.

Utsira Nord

Production of energy at Utsira Nord is divided into three areas, each area opened for competition with a capacity of minimum 460 MW and a maximum capacity of 500 MW. The Ministry of Petroleum and Energy will consider, in accordance with the Norwegian Water Resources and Energy Directorates (NVE) assessments, to increase the total capacity up to 750 MW for each area.

The Ministry has decided to allocate the project areas of Utsira Nord without executing a pre-qualification. Three actors will be awarded areas in Utsira Nord based on the following qualitative criteria:

• Cost level for 2023 based on a 500 MW wind project in operation from 2030, positively emphasizing low cost levels with a realistic estimate. Cost levels will be weighted at 30%
  
  
• Contribution to innovation and technology development to ensure a lower cost development, based on estimated costs and energy production for a 500 MW wind project in operation from 2035. Innovation and technology will be weighted at 20%.
  
  
• Execution ability, emphasizing a mature project plan, sufficient project financing, competence and financial strength. Execution ability will be weighted at 30%.
  
  
• Sustainable development that safeguards coexistence and minimizes consequences for the climate. Sustainability will be weighted at 10%.
  
  
• Positive local ripple effects for industry development, showing how the offshore prosject will contribute to increase competence and development of supply chains. Positive local ripple effects will be weighted at 10%

Based on the above criteria, the three actors with the best ranking will be awarded one project area. The best qualified actor will be awarded its preferred project area in Utsira Nord.

In addition to the competition for project areas, there will be a competition for state funding to ensure that funding is kept at the lowest possible level. The proposed model is outlined below:

• A two-sided contract for difference with a reservation price and a capped amount. The contract will have a funding period of 15 years.
  
  
• Two of three actors will recieve state funding. The actor not recieving state funding will maintain the exclusive right to the area for a limited period, and have the opportunity to participate in future competitions for state funding.
  
  
• Two actors will be awarded state funding for 500 MW, and is given an option to build 750 MW.