Shell Enters Competition for Norwegian Wind Farm Leases

Sell compets for Norwegian windfarm leases
Shell's Noordzee Wind Farm in the Netherlands (Shell)

Published Jun 17, 2021 3:59 PM by The Maritime Executive

Competition is continuing to grow for Norway’s upcoming auctions for two new offshore locations for wind projects. Shell became the latest energy major to announced that it was forming a partnership to compete for the Norwegian leases. 

Shell, which notes that it has been active in wind power for 20 years, said that it is establishing a long-term, industrial partnership with two of Norway’s largest hydropower companies, BKK and Lyse. The three companies plan to work together in the development of offshore wind and noted that work is already underway preparing applications for licenses for both the Sørlige Nordsjø II and Utsira Nord fields that the Norwegian authorities have opened up for development.

“We see Norway as an interesting area both to ensure Europe enough renewable electric power and to develop floating offshore wind solutions that can become commercial. Also from a global perspective, we see Lyse and BKK as valuable partners with expertise in hydropower and grid solutions,” said Hessel de Jong, who heads Shell's offshore wind business in Europe.

The Norwegian government identified the two areas in 2019 as potential targets for the development of offshore wind and in 2021 began the process to accept proposals for the areas. Utsira Nord located off the southwest coast of Norway has been designated for up to 1500 MW and due to its location will be a floating wind farm. The Sørlige Nordsjø II located off the south coast of Norway bordering the Danish sector in the North Sea will be one of the most hotly contested auctions due to the strong benefits of its location. It has been designated for up to 3000 MW, but the nature of the location makes it challenging for fixed wind installations. Companies may choose to use floating wind in this area as well.

The Shell alliance said it has great ambitions for the project highlighting that especially the SN2 area, with its location on the border of the Danish shelf, is ideal for connection to Europe. Both fields they said are however demanding in relation to developing solutions and technology. SN2 they said would challenge the current boundaries of bottom-fixed technology, while Utsira Nord will require innovative solutions for floating wind power. 

“The two renewable energy forms hydropower and wind power complement each other perfectly,” said BKK CEO Jannicke Hilland speaking on the motivations for this alliance. “The North Sea has one of the world's best wind resources. When there is a lot of wind, we can save water in our reservoirs. When the wind is calm, we can cover the demand for power with adjustable hydropower. We want to contribute to the electrification of the oil and gas industry and connect the offshore wind development in the southern part of the North Sea to relevant markets in Europe.”

At the beginning of this week, BK also announced plans to compete for licenses for the SN2 field. BP, which is partnering with Akers Offshore wind and Statkraft, highlighted the proximity of SN2 to major industrial areas creating an excellent opportunity for the export of electricity. 

Other majors in the industry, including Equinor and Orsted, are also expected to submit proposals for the SN2 site. Norway is expected to award the first leases for these fields by 2022 as it continues to identify additional locations for the development of offshore energy.