Changes to the competition for the Sørlige Nordsjø II area and new signals from the Parliament
As a result of critical input from Renewables Norway (Fornybar Norge) to the ongoing competition for SN II regarding the short deadline for prequalification application for Sørlige Nordsjø II (SN II), the Government decided on June 30 2023 to postpone the prequalification application deadline for SN II to September 1 2023. The Government has stated that the overall timeline for the competition for SN II is not affected by the extended prequalification application deadline.
The cost levels for offshore wind has increased significantly recently, and the cost analysis that forms the basis for the previously set support scheme from the Norwegian Government for SN II no longer reflects the costs of constructing and operating an offshore wind farm. As a result of this, the previously set support level for SN II would not be sufficient to make the project profitable for the potential bidders for SN II. The Norwegian Government has therefore in June 2023, with backing from the Parliament, increased the support level for SN II from 15 to 23 billion NOK. The Government and the Parliament has moreover stated that since the support level is set to 23 billion NOK, there is no need for a reservation price, since the level of financial support in any case is capped at 23 billion. The Government has therefore removed the reservation price for SN II, previously set at 0,66 NOK/kWh. However, the changes are still to be reflected in the CfD for SN II. The Government has also conducted a closed hearing round on the CfD for SN II, and the hearing may result in further changes to the CfD for SN II. There might also be questions from the open Q&A regarding SN II and Utsira Nord (UN) that might result in updates to the tender documents.
The Parliament has in its hearing of the case on June 14 2023 decided that the Parliament consents to the Government’s proposal for increased support level for SN II as well as the proposal to remove the reservation price in the CfD, see https://www.stortinget.no/no/Saker-og-publikasjoner/Saker/Sak/?p=93724. We expect that the changes will be welcomed by the offshore wind players and increase the probability for SN II first phase to be completed.
The Parliament has furthermore given some guidance for the Government regarding the future development of offshore wind and safeguarding of environmental interests.
The Parliament asks the Government to research how offshore wind can be utilized for electrification of offshore petroleum installations and replace electricity from the onshore grid. The Government is furthermore requested to ensure that mapping of the marine environment and seabirds is included in the decision basis for future licenses for offshore wind.
As regards to the new areas for offshore wind mentioned by NVE, the Parliament requests that the Government by the time of the state budget forms a general plan for mapping of the nature in the areas that are relevant for offshore wind.
For SN II, the Parliament requests the Government to ensure that research regarding the consequences of SN II is conducted in the development- and operational phase, taking into account the wind farm’s impact on nature and environment. The research shall be used to safeguard coexistence and sustainability in the future development of offshore wind. The Parliament furthermore requests the Government to consider increased weighting of sustainability- and possible local ripple effects-criteria for future offshore wind development.
The Parliament’s increased focus on safeguarding of the environment is concurrent with an overall focus from the Government to ensure that development of power projects take due consideration to the environment and other interests. The requests from the Parliament moreover give the Government leeway in how the Government wishes to follow up on the requests.