Norway Completes First Offshore Wind Auction with Ikea Franchisee and Jera
Norway completed its first offshore wind auction by selecting a partnership between the investment arm of Ingka Group, based in the Netherlands and the largest Ikea franchiser, and Parkwind, majority-owned Japan’s Jera, a partnership between Tokyo Electric Power Company and Chubu Electric Company. Government officials called the auction a milestone in their efforts to develop offshore wind saying that they have taken a big step forward.
Five groups had qualified for the auction, but in the end, it came down to spirited bidding between the Ventyr consortium and Norway’s Equinor in partnership with RWE. Statkraft, Aker Offshore, and BP, a group led by Shell, and Germany’s Energie, all withdrew or failed to submit bids. Bidding began on Monday and the government continued it into Tuesday before the Ventyr group was declared the winner.
“This is a very good day. This government has worked to realize offshore wind in Norway since day one, and today we have carried out the first successful auction,” said Norway’s Prime Minister Jonas Gahr Støre. “Norway has ocean areas with rich wind recourses, and a supply industry with world-leading technology expertise. We will build on this fundament in the coming years by announcing new areas and new auctions.”
The first location, known as Sorlige Nordsjo II is distant from the Norwegian coast approximately 124 miles into the North Sea near the border with Denmark. It however is one of the few areas that Norway will be able to offer that can use fixed-bottom turbines. A second proposed auction for a site using floating wind turbines was delayed but Norway is already exploring other potential sites.
The bidding was based on a contract for difference (CfD) where the government will provide support, capped by the parliament at 23 billion Norwegian crowns ($2.17 billion). The final strike price for the electricity in the auction is approximately $100 per megawatt hour in a 15-year contract.
Ingka, which is supporting the development of renewable energy through its investment company, said its goal is to have the first turbines operational by 2030. The plan is to develop a 1.5 GW wind power farm.
The consortium now has four weeks to complete and sign the contracts with the Norwegian government.
Norway’s energy minister highlighted that the new government is giving a higher priority to wind energy. It is a big step for a country that historically has been one of the largest gas producers. The government says it wants to lead the transition to renewable energy believing that Norway has areas with the potential for more than 30 GW of offshore wind production by 2040.