Today, The Norwegian Government issued a much-anticipated press release regarding the offshore wind areas Utsira Nord (“UN”) and Sørlige Nordsjø II (“SNII”). Accompanying the press release, was a proposal for prequalification criterias, an auction model, a support scheme for SNII, as well as qualitative award criterias and a support scheme for the UN. It is the ambition of the Government to award the relevant areas within Q1 2023.

The proposal is now sent on a public hearing and the deadline for comments is set to January 6, 2023. The consultation documents can be found here: Høring av prekvalifiseringskriterier og auksjonsmodell for Sørlige Nordsjø II – regjeringen.no and Høring av kvalitative kriterier og støtteordning for Utsira Nord – regjeringen.no.

For SNII, the Government has decided that there will be a prequalification process for the first phase of SNII (1500 MW) based on the following main qualitative criterias: implementation capacity, sustainability and positive regional effects. The prequalification phase will limit the number of participants in a following economic auction. With respect to support schemes, the Government has the ambition to award the first phase of SNII without any subsidies, although a similar support scheme for the UN is available; see below.

For the UN, the Government has decided that the award of areas shall be according to qualitative criteria, without a prequalification process. The Government has suggested splitting the UN into three sub-areas with a capacity of 500 MW each. The Government has furthermore suggested that the award of an area, as well as the award under the support scheme, shall take place in a two-step process, as follows:

(i) The three areas are awarded according to qualitative criteria, where the three best projects are granted an exclusive right to continue the licensing process.

(ii) The Government will then have a tender process where the three projects will have to compete for support. The Government will set a limit for the state subsidy, and not all projects will obtain such subsidy.

The proposed support scheme is based on a two-sided contract for difference over 15 years with a cap for subsidy payments and payments from the licensee under the contract.

The proposal raises several questions with respect to more details of the regulations that will need to be addressed in the hearing process.

We furthermore note that the Norwegian Parliament on December 7, 2022, will determine whether the Government may award a license under the Offshore Energy Act without competition, directly to licensees within offshore oil and gas, where the electricity will be used directly or indirectly for electrification of oil- and gas installations. Such clarifications may pave the way for new offshore wind projects even before the planned projects within the UN and SNII.