* Seeks to foster domestic industry
* Power to be supplied to offshore platforms, exported
* Western Europe's largest oil, gas producer
* More than 98% of its 2020 electricity from hydro, onshore
wind
* For Factbox on potential bidders, click
By Nora Buli
OSLO, March 29 (Reuters) - Norway will press ahead with
North Sea wind power this year, awarding its first development
licences as it spurs the transition of its oil and gas industry
and despite its already plentiful renewables supply.
The government has earmarked two areas in the North Sea for
up to 4.5 gigawatts of floating and bottom-fixed wind turbine
capacity, just under half the current installed capacity in
Britain, Europe's offshore wind leader.
Norway does not actually need offshore wind farms for power
- nearly all its electricity comes from renewables already - but
instead sees the sector as a means of helping its vast oil and
gas industry secure a new, low-carbon business model for the
future.
Oslo will present details of the tender this spring as part
of a white paper on the energy sector, and first wind farms
could be in operation by the end of the decade.
Many details remain unclear but the process should follow
oil and gas exploration procedures where typically seabed rent
is not charged.
Norway, western Europe's largest oil and gas producer, is
examining how it can adapt its petroleum industry.
Norway's Equinor and several other European oil
firms including Total, BP and Shell
have announced plans to massively scale up their renewable power
portfolios, often focusing on offshore wind, as they seek to
reduce reliance on oil to satisfy stakeholders and meet climate
targets.
"We believe that especially offshore resources offer all the
prerequisites to succeed. We have the knowledge, the experience,
we have a good track record from establishing and building
advanced installation in tough conditions far out at sea," NOG
oil lobby boss Anniken Hauglie told Reuters.
"We now need to use the time to build up new industries, new
value chains, that will over time become the new legs for Norway
to stand on," she said.
The two sites - Utsira Nord, northwest of the oil industry
capital Stavanger and Soerlige Nordsjoe II, bordering the Danish
sector of the North Sea - both include deep water sections more
suited to floating turbines.
Floating turbines are a less mature technology but widely
seen as offering the greatest opportunity for Norwegian firms.
Equinor is developing one such pilot project, called Hywind
Tampen, which will supply power to its Gullfaks oil platform.
Norway is seeking to cut greenhouse gas emissions produced
by its offshore platforms, which tend to be powered by on-site
gas turbines. Linking them to the power grid onshore is one
option, and offshore wind turbines are another.
"A lot of players want to position themselves in Norway, as
it is a huge flagship project," said Vegard Wiik Vollset,
vice-president renewable energy at consultancy Rystad Energy.
"It has clear synergies for some of these companies given
its potential for electrification of oil and gas fields on the
Norwegian Continental Shelf."
NEW EXPORT
Like oil, Norway would export the offshore wind it produces.
In 2020, hydro and onshore wind power accounted for more than
98% of Norway's record high electricity production of 154.2
terawatt hours (TWh), generating net exports of 20.5 TWh, data
from regulator NVE showed.
"The way the market is looking now, we believe there will be
a power surplus for a long time into the future," said Christian
Rynning-Toennesen, CEO of top utility Statkraft.
Statkraft will participate in the offshore wind tender with
Aker Offshore Wind <AOW-ME.OL>, a company created by the Aker
group, which previously focused mainly on oil and gas.
Non-EU Norway could also help to meet the European Union's
goal of increasing offshore wind power capacity to 60 GW by 2030
from 12 GW currently.
"If they want to achieve it, it needs to happen in the North
Sea and if it happens in the North Sea, Norway should be a part
of it," said Steffen Syvertsen, CEO of utility Agder Energi.
Agder Energi is also bidding in the upcoming offshore wind
licensing round, teaming up with Vaargroenn ("our green" in
Norwegian), a joint venture of private equity firm HitecVision
, once solely focused on oil and gas, and Italian
energy producer Eni.
UNPROFITABLE
Offshore wind in Norway remains unprofitable without
subsidies, noted Sigbjoern Seland, chief analyst at StormGeo
Nena Analysis, adding the technology needs to achieve continued
sharp cost cuts, move the cost of grid connection away from
developers and generally higher demand.
"Based on current developments, this could happen in 5-8
years' time, most likely in 10-15 years," Seland said.
"It's not enough with one wind farm, you need a view of 3-4
wind farms of a certain size," said Daniel Willoch, a policy
adviser at wind power lobby group NORWEA.
Others seemed confident of government support.
"One thing we have seen across the world is that governments
find their own way to support industrial development," said Aker
Offshore Wind CEO Astrid Skarheim Onsum.
Norway had access to "a vast toolbox of support mechanisms"
and a history of finding tailored solutions to support its
industrial development, she added.
"It reminds me a little of the time we discovered oil for
the first time," Tina Bru, oil and energy minister, told a
recent energy conference.
(Editing by Gwladys Fouche and Jason Neely)