The Government’s ambition is to award areas for offshore wind power corresponding 30 GW within 2040, which will be equal to approximately 75% of the capacity of the Norwegian power system today. Good wind conditions and big areas at sea, which are five times larger than our areas on land, make Norway an attractive country for producing offshore wind power.

The License Process for Offshore Wind Power

The license process pursuant to the Offshore Energy Act is new and includes the following key steps:

1. The opening of an area: One of the first key steps is the opening of a defined area for offshore wind production. A license pursuant to the Offshore Energy Act can be granted within an area that has been opened for offshore wind production.
2. The announcement of an area: After one or several areas within the opened area has been announced, developers may participate in the process which may lead to being awarded a right to an area. The appointed areas shall as a main rule be announced through competition. The announcement shall include provisions for performing the competition. The Ministry of Petroleum and Energy decides whether an area shall be awarded based on a monetary auction, qualitative criteria or a combination. Before being able to participate in the competition for the award, the Ministry of Petroleum and Energy may require a prequalification of interested developers and hereby the Ministry may limit the number of applicants to be prequalified.
3. The award of a right to an area to the developer: The developer who has been awarded an area is given a time-limited exclusive right to develop the offshore wind project within this area, such as suggesting and performing a project-specific impact assessment program and submitting a license application.
4. The project-specific impact assessment program: At the latest 6 weeks after being awarded a right to the area, the developer must send a proposal for a project-specific impact assessment program. After having been on public consultations this program must be set by the Ministry and will be performed by the developer. The purpose of the project-specific impact assessment is to uncover relevant advantages and disadvantages of the specific project before the establishment, consider the effects of the possible construction of the project and suggest mitigating measures.
5. The license application: Within 2 years after the Ministry has set the project-specific impact assessment program, the developer must send a license application. The license application together with the project-specific impact assessment will be sent on public consultations. On this basis, the Ministry can grant a license with a duration of until 30 years.
6. The detailed plan: Within 2 years after being granted a license, the developer must send an application for the approval of a detailed plan for the construction and operation of the project. A detailed plan is typically sent on public consultations before being approved. The detailed plan must be approved by the Norwegian Water Resources and Energy Directorate (“NVE”) before the developer can start the construction of the project. Within three years after the approval of the detailed plan, the energy facilities must be put into operation.

Areas Opened for Offshore Wind Power
In 2020, the first two areas, Sørlige Nordsjø II and Utsira Nord, were opened for offshore wind projects. By announcing the first competitions in March 2023, the Government has – for the first time – invited developers to participate in the competition for being awarded a right to develop a wind power project in a specific project area within the opened areas Utsira Nord and Sørlige Nordsjø II.

Sørlige Nordsjø II
On 29 March 2023, the Government announced one project area called the “first phase” of Sørlige Nordsjø II with minimum and maximum limits within 1,400-1,500 MW. Sørlige Nordsjø II is located south in the North Sea near the border to Denmark. The average depth of the area is 60 meters, making it compatible for both bottom-fixed and floating turbines.

The awarding model for the announced area is competition and includes two steps: prequalification followed by a monetary auction. Only 6-8 applicants will be prequalified and may participate in the monetary auction.

As a part of the prequalification process, the following factors are weighed and described respectively:

1. Feasibility (60%): This criterion involves requirements for financial strength, technical competence, relevant experience and requirements for health, environment and safety. The Government has an ambition of facilitating for having the first offshore wind projects in operation within 2030. Therefore, this criterion also includes requirements for the project concept, project plan and financial plan.
2. Sustainability (20%): The purpose of this criterion is to ensure coexistence and minimize the consequences for the climate and environment.
3. Positive local ripple effects (20%): This criterion will provide an advantage to applicants who contribute positively to increasing the competence and development in the contractor chains.

The announced area shall be connected to the mainland in Norway through a radial connection. The Ministry of Petroleum and Energy has stated that the developers shall plan, build, own, operate and finance the grid. Regulations regarding grid connection are still under development.

The state funding model suggested by the Ministry is a two-sided contract for difference for renewable energy production at sea from the “first phase” of Sørlige Nordsjø II and will be provided to the winner of the auction. The suggested state funding is however not finalized and is furthermore subject to approvals from the Parliament and EFTAs Surveillance Authority.

The applicant who bids the lowest price wins the auction. The winner of the auction will be awarded the announced project area and hereby obtain a time-limited exclusive right to develop the wind power project in the project area. The auction model is British auction with open bidding. Detailed rules for the auction will be published before the auction finds place.

Utsira Nord
On 29 March 2023, the Government announced three project areas in the opened area Utsira Nord. Utsira Nord is located outside of the coast of Rogaland in Western Norway. The minimum and maximum limits for installed capacity in each project area are 460-500 MW. A possibility of increasing the capacity of each project area to 750 MW have been indicated in the announcement, but this is subject to further assessments.

Seeing that the average depth of the area is 267 meters, this area is considered suitable for floating turbines. These facts are part of forming the basis for the announcement and criteria for the award of project areas within Utsira Nord.

The awarding model for the project areas within Utsira Nord is competition through qualitative criteria, without any prequalification process. The criteria include relevant requirements for health, environment and safety, in addition to other objective and non-discriminatory criteria. Hence, the awarding model for Utsira Nord differs from the awarding model for Sørlige Nordsjø II, seeing that the latter is based on a prequalification process followed by a monetary auction.

As a part of the qualitative criteria for the award of a project area within Utsira Nord, the following factors are weighed and described respectively:

1. Cost level 2030 (30%): The purpose of this criteria is to contribute to awarding project areas to the most cost-effective projects, which will contribute to making floating turbines commercial and competitive as fast as possible and reducing the authorities’ costs by limited needed state grant for the realization of a project.
2. Innovation and technology (20%): The purpose of this criterion is to promote measures, innovations and technology development that can provide future cost reductions for floating turbines, in order to making floating turbines commercial and competitive as fast as possible.
3. Feasibility (30%): This criterion involves requirements for financial strength, technical competence, relevant experience and requirements for health, environment and safety. The Government has an ambition of facilitating for having the first offshore wind projects in operation within 2030. Therefore, this criterion also includes requirements for the project concept, project plan and financial plan.
4. Sustainability (10%): The purpose of this criterion is to ensure coexistence and minimize the consequences for the climate and environment.
5. Positive local ripple effects (10%): This criterion will provide an advantage to applicants who contribute positively to increasing the competence and development in the contractor chains.

The announced project areas within Utsira Nord shall be connected to the mainland in Norway through a radial connection. The Ministry of Petroleum and Energy has stated that the developers shall plan, build, own, operate and finance the grid. Regulations regarding grid connection are still under development.

Three developers will be awarded one project area each based on the qualitative criteria. A competition for state funding is suggested to find place later in the license process and is expected to be granted to only two of the three developers who is awarded a project area. Once finalized the suggested state funding will be subject to approvals from the Parliament and EFTAs Surveillance Authority.

More information regarding the announcement of the project areas within Sørlige Nordsjø II and Utsira Nord can be found on the Ministry of Petroleum and Energy’s webpage for offshore wind power (in Norwegian only).

Areas to be Opened for Offshore Wind Power

It is expected that most of the areas to reach the Government’s ambition of awarding areas corresponding to 30 GW offshore wind power within 2040 will be opened in the years to come.

To reach its ambition, the Government has started the preparatory work with the aim of opening new areas for offshore wind power production.  On 25 April 2023, the Ministry of Petroleum and Energy received a report from a directorate group led by NVE which includes an identification of 20 new areas to be further investigated for offshore wind power production.

By identifying areas exceeding 30 GW, areas may be eliminated later in the process while still making it possible to reach the ambition of 30 GW offshore wind power within 2040. The new areas are considered technically suitable for offshore wind power and, based on current knowledge, have relatively low conflict of interests. Factors such as economy and grid investments have not been considered. NVE’s report includes a suggested impact assessment program for the identified areas. Further steps must be completed before a decision of the opening of an area can be made.

Furthermore, NVE’s report includes a time schedule which aims of awarding new areas for offshore wind power projects in 2025. NVE is of the opinion that only the areas and capacity of Sørlige Nordsjø II (called Sørvest F) and Utsira Nord (called Vestavind F) can be expanded and opened for being awarded in 2025.  In addition to the announcement of March 2023, an expansion of 750 MW for Utsira Nord and an expansion between 2.7 and 8.5 GW for Sørlige Nordsjø II are suggested by NVE. The consequences of the expansion must be considered further. NVE has suggested a separate impact assessment program for these areas.

More information can be found on NVE’s webpage for the report and the Ministry of Petroleum and Energy’s webpage for offshore wind power (both in Norwegian only).

Grette’s Expertise
Grette’s experience from international offshore wind power projects give us a unique advantage for advising developers and contractors in this new industry.

To meet our clients’ needs, Grette has established an own team which is responsible for this market. Our team consists of lawyers with significant experience from international offshore wind projects, Norwegian and international offshore projects, and other energy projects.