How Norway’s upcoming offshore wind auctions could challenge even experienced developers

February 15, 2023
 | 
2 min read
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The two first Norwegian offshore wind auctions are expected to kick off within a few months. Auction participants will compete for leases and support for 3 GW offshore wind spread across four projects: Sørlige Nordsjø II Phase 1 and Utsira Nord 1, 2 and 3.

The proposed auction models and criteria for winning shows a broader focus than just bid price:

  • Utsira Nord leases will be allocated based entirely on qualitative criteria including floating project cost certainty and future cost reduction estimates from innovation and technology development. The three highest ranking projects will win leases. The lease winners will later compete for support in a separate, price-based auction, where it is proposed to ensure competition by not awarding support to all projects.
  • As Sørlige Nordsjø II Phase 1 is located 170 km from the Norwegian shore, a suggested pre-qualification criterion is experience with HVDC offshore grid (i.e. developing, building and operating). If they pass the pre-qualification, bidders will then compete in a price-based auction for two-sided CfDs, where the lowest offered contract-price wins. If won with a zero-bid, Sørlige Nordsjø II could effectively be awarded without support.
  • It is proposed for both auctions that bidders will be assessed based on the carbon footprint of the windfarm. A method for deducting carbon footprint per kW has yet to be determined.

Even for experienced developers, some of these criteria can be tricky: How many of the announced developers and consortia have documented HVDC project experience?
And where could the cost reductions for floating projects come from, when scale is not a key contributor?

Reach out for Aegir Insights’ full insights of the upcoming auction in Norway.

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Contact

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