Offshore wind power not yet profitable

New report released to the government outlines 20 regions for development

Photo: Terje Pedersen / NTB
Kjetil Lund, director of the Norwegian Water Resources and Energy Directorate, presented a report to the Norwegian government that concludes that offshore wind power is currently not profitable.

Marius Helge Larsen
NTB

“Offshore wind in Norway is not profitable today, and floating offshore wind is quite far from being profitable,” said Kjetil Lund, director of the Norwegian Water Resources and Energy Directorate (Norges vassdrags- og energidirektorat or NVE).

“How much of the state budget should be spent on expanding power production that’s not profitable, is—and should be—a political assessment. We have not touched on that in this report,” said Lund at a press conference on April 25.

In the room sat Minister of Petroleum and Energy Terje Aasland (Labor Party), who, along with the rest of the government, plans to allocate areas for 30 gigawatts (GW) of offshore wind before 2040.

Aasland has received an expert report that points to 20 possible regions for developing offshore wind. The expert group was led by NVE.

“We have not assessed if it makes economic sense or if it is realistic to develop offshore wind on this scale,” the NVE director emphasized when he handed over the report.

“Enormous amount of power production”

He was determined that offshore wind in Norway is not profitable as of today.

“And floating offshore wind is quite far from being profitable. Whether it will ever be profitable, and if so when, we do not know for sure today,” he said.

Several directorates have collaborated on the recommendations that were handed over to the government.

The areas the expert group points to are spread over large parts of the Norwegian coast. They are large enough to produce between six and 13 times more power than the government’s target.

But that does not necessarily mean that the government’s goals are not ambitious.

“Thirty GW is an enormous amount of power production on a Norwegian scale; it is almost a doubling of total power production,” Lund pointed out.

“Strong effects on the entire power system”

The NVE director believes that such an extensive development will have strong effects on the entire power system.

“It is difficult to imagine development without profitability, at least in the long run.”

On the other hand, Lund pointed out that much of this is in the far future, and that it will not be possible to assess finances, costs, and grid requirements until at a later date.

Must assess grid requirements

He says that politicians must also decide how much of the grid they are willing to develop to facilitate offshore wind.

For several of the areas that are now to be assessed, large grid investments are required to get the electricity to shore, as well as grid investments on land. This is in addition to the general costs of development.

“In Norway, grid expansion is not paid for through the state budget, but directly by households and the business community through a grid fee,” the NVE director pointed out.

NVE has produced a table which shows that the investment costs for offshore wind are NOK 29-50 million/MW, depending on whether the wind turbines float or are mounted on the seabed.

Aasland: “A Kinder Egg”

NTB asked Aasland in writing what his  response is to the questions raised by Lund.

“Regarding the costs of development, we assume that the industry drive innovation, technology development, scaling, and industrialization as important elements to bring costs down,” Aasland replied.

Aasland pointed out that the report presented on April 25 shows that it is entirely possible to realize the government’s offshore wind investment:

“This venture is like a Kinder Egg [a chocolate egg with surprise toy inside]. It gives us more renewable power, which we can phase into the Norwegian power system when we need it. It will give us good opportunities to cut emissions by electrifying society and replacing fossil energy use with renewable energy. And the third is that this will provide a great opportunity for Norwegian industry and Norwegian suppliers, which means safe workplaces and more value creation,” he said.

He believes the investment is a great opportunity for Norway.

“The report clearly shows that we have a great opportunity to succeed in a good way in implementing the government’s ambitious offshore wind plan – also in coexistence with other important marine industries, he said.

This article originally appeared in the June 2023 issue of The Norwegian American.

Avatar photo

NTB

NTB (Norsk Telegrambyrå), the Norwegian News Agency, is a press agency and wire service that serves most of the largest Norwegian media outlets. The agency is located in Oslo and has bureaus in Brussels, Belgium, and Tromsø in northern Norway