Offshore wind in the second southern North Sea could cost NOK 80 billion – E24

The Sørlige Nordsjø II offshore wind farm will require investments approaching $80 billion, according to forecasts by a major Swedish bank. The Minister of Energy still believes there is a bidding war for the right to build.

on Energy conference in Lesibo There was a vote on Thursday morning: those who thought an auction would be held this winter for the development of the Sørlige Nordsjø (SN II) offshore wind farm should raise their hands.

Only organizer Fornybar Norges raised their hands in the air. Many of the investors and bankers in attendance sat with their hands in their laps.

It may not be so strange.

Sweden's main bank SEB believes that SN II may require investments of up to €7 billion (nearly NOK 80 billion).

In addition, there are operating costs.

Government subsidies can reach a maximum of NOK 23 billion over 15 years.

Pointing to Equinor

SEB's head of project finance in Norway, Simon Gunniklav, believes that government support 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.

– It will then be cheaper to finance development from its balance sheet, for companies large enough to do so, says Juniclav.

Seven groups have indicated interest in bidding for SN II (see fact box below). The banker points to listed, state-owned giant Equinor as the only one of the seven companies that can manage such a raise without much project financing.

It was pointed out, and he turned around

One and a half kilometers south as the crow flies, another energy conference was held on Thursday. Oslo Energy Forum.

Here too, Equinor is referenced, literally.

When asked by Congressman Siri Lil Mans whether Energy Minister Terje Aasland thought there would be an auction for SN II, he addressed two men in the front row. The CEOs were Anders Opedal at Equinor and Christian Renning-Teunissen at Statkraft.

“I'm looking towards the gentlemen here,” said Aasland.

But both Oppedal and Rehning-Teunissen turned simultaneously and looked back into the hall. With some humor, the two pointed out that they seemed to be wondering who Åsland was talking about?

In the hallway with Aasland

– There is nothing new to report, Rynning-Tønnesen tells E24, whether the group to which Statkraft belongs decides to bid or not.

– Aasland took you out to the lobby after his performance on stage?

– It was about something completely different, replies the head of Statkraft.

Rynning-Tønnesen reported as recently as January of this year that SN II was a “fringe project” that was difficult to achieve profitability.

For its part, preferred bidder Opedal rejects that Equinor has already decided to bid.

-We haven't decided anything yet. This is a decision of the Board of Directors. “It will only happen when we receive an invitation and everything is in place,” says Opedal.

Opedal has just seen Equinor's market value fall by tens of billions of kroner because the stock market doesn't like his plans to invest heavily in renewable energy.

I think it will work out well in the end

Although almost no one at the energy conference in Lesibo believes there will be an auction, and the stock market is unlikely to like Equinor's bids, Asland remains optimistic.

– There is no reason to be pessimistic about the development of Norwegian offshore wind energy. We received seven applications to pre-qualify for SN II. “There are many strong consortia that I expect will participate in the auction,” Aasland tells E24.

People in the energy industry expressed to E24 that perhaps $23 billion in government subsidies for SN II development should be spent on the next large offshore wind farm, Utsira Nord.

It will be developed using floating wind turbines, and will likely require at least NOK 50 billion in government subsidies. Norway has the greatest potential to build a new industry through floating offshore wind.

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, and SN II is the first starting point. I want to do it,” says Åsland.