Statkraft thought for a long time that there would be no need for offshore wind in Norway, but in a few months they have changed their minds. They are now planning an offshore wind farm in the North Sea with Aker and will sell the power to foreigners and the oil industry.
Last summer, the industrial group Aker launched a comprehensive investment in renewable energy and low-carbon solutions – the umbrella for the subsidiary Aker Horizons.
Over the summer, autumn and winter, there have been constantly new announcements about stock exchange listings, issues, acquisitions and new plans – the focus is on onshore wind power, offshore wind power, solar parks, hydrogen and carbon capture.
On Wednesday, however, there was a news item that the Aker system considers to be very important: The offshore wind company Aker Offshore Wind enters into a partnership with Statkraft – Europe’s largest supplier of renewable energy.
Together, they want to look at the possibility of building a bottom-fixed wind farm in “Southern North Sea II”, one of the two blocks that the Norwegian authorities have now announced for offshore wind. The other is called “Utsira Nord”.
– The dialogue started last autumn and there has been a negotiation process until yesterday about the concept for the collaboration, says CEO Christian Rynning-Tønnesen in Statkraft to E24 about the agreement that has now been entered into.
– Statkraft and Aker have had a good collegial relationship for many years. In parallel with the dialogue about this collaboration starting last year, both parties have also been involved in the work of realizing offshore wind as an industrial opportunity for Norway, adds CEO Øyvind Eriksen in Aker.
Aker owns 51 percent of listed Aker Offshore Wind.
Background: Statkraft and Røkke collaborate on offshore wind
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Others may be invited
The news of the Statkraft collaboration comes shortly before Aker’s subsidiary Aker Horizons is scheduled to be listed on the stock exchange on 1 February, and shortly after Aker Horizons announced the acquisition of Irish Mainstream Renewable Power.
With all the investments, there will be a significant need for capital in the Aker system’s renewable investment in the future. Here, Aker Horizon’s new financing package of 5.7 billion will contribute.
– How will the development in this project be financed, do Aker and Statkraft share equally in the bill?
– The collaboration is based on equality. In the first phase, we will work out the possibility and prepare a joint application (to the authorities, journ.anm.) In competition with other actors. Then at some point an investment decision will be made, says Eriksen in Aker.
– The agreement also allows us to include other co-owners in the project, but we have not considered that yet and an investment is still a few years ahead, says Rynning-Tønnesen.
– Do you want to collaborate on more projects in the future?
– We start with the possibilities in “Southern North Sea II”, says Rynning-Tønnesen in Statkraft.
– Aker Offshore Wind is working on other specific opportunities, including «Utsira Nord». We will be in a dialogue with Statkraft about the possibilities for that, but the focus now is on the project in “Southern North Sea II”, says Eriksen in Aker.
PS! On 19 January, Aker announced that it had transferred its 346.3 million shares in Aker Offshore Wind from its subsidiary Aker Capital to Aker Horizons – the subsidiary that acts as an umbrella for the renewable investments and which will soon be listed on the stock exchange. According to Øyvind Eriksen, the transfer at NOK 10.44 per share was carried out at the current share price without any realized gain for Aker.
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The wind has turned for Norwegian offshore wind
The discussion about wind power on land in Norway has been heated, but when it comes to offshore wind, several have been optimistic – both because you do not have to build down nature and because you can use expertise from the offshore industry.
Whether it will be profitable has been questioned by many, as offshore wind is far more expensive than onshore wind power. Even Statkraft was negative about offshore wind in Norway, as recently as a year ago.
In 2017, the company sold out of two British offshore wind projects, where they were partners with, among others, Equinor, and have not been involved in offshore wind projects since.
– We had a successful investment in the UK, but we sold out because we had to prioritize our capital. After investing 11 billion, we sold with 10 billion in profit, says Rynning-Tønnesen in Statkraft.
– What has happened since you have turned around and now see opportunities in Norwegian offshore wind anyway?
– We have always had faith in offshore wind as a technology, says the Statkraft boss and lists three points that explain why they have now turned around:
– What has happened lately is that two licenses have been issued in Norway. We also see that with the climate initiative the EU has announced, Europe must do significantly more than we thought in 2016. In addition, costs have fallen even more, so that offshore wind has become more competitive.
In the stock exchange release, Statkraft and Aker also point out that strong growth and «a changed competitive picture» indicate that offshore wind will «take a greater role in the European energy transition».
In September, the European Commission announced a tightening of the climate targets from 40 to 55 percent cuts by 2030 and zero emissions in 2050. In addition, the EU has promised large funds for the investment.
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The electricity will be sold abroad and to the oil industry
In the new collaboration, it is Aker Offshore Wind that will take the lead and use its expertise in the development phase itself. Statkraft, on the other hand, will play a key role with its expertise when the plant is to be operational and the electricity is to be sold in the market.
Even if you want to build offshore wind turbines on the Norwegian shelf, it is not Norway that is primarily the market Statkraft envisages as a power customer:
– In “Southern North Sea II”, the main market for electricity will be one of our neighboring countries, because we are talking about several thousand megawatts, says Rynning-Tønnesen, who also has another potential customer in mind:
– But it is interesting if some of the power can go to the oil industry. They want the same renewable power needs as our neighboring countries in the future, he continues.
The government recently announced that it will more than double the CO₂ price on the Norwegian shelf by 2030. Such a price level will trigger a number of initiatives to cut CO å emissions on the shelf, including more electrification of oil and gas fields.
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Will build up a Norwegian offshore wind industry
Although the oil industry can become a good customer, it is still the case that in Norway one can expect an electricity price of around 30 to 40 øre per kilowatt hour over the next ten years, according to forecasts from Statnett and NVE. It is a lower electricity price than is typical in other European countries.
On top of this, bottom-fixed offshore wind is still more expensive to develop than onshore wind power.
When asked why Statkraft does not only expand wind power in the UK, Denmark or Germany, the Statkraft CEO points out that Norway has “a special advantage” that speaks in our favor:
– Norway and Statkraft have large hydropower resources. In “Sørlig Nordsjø II” we will connect both to the Norwegian mainland and the market where the electricity will be sold. Then we can combine the capacity we have in the variable power reservoirs with the unpredictable wind power for a 100 percent secure delivery, says Rynning-Tønnesen.
Aker CEO Øyvind Eriksen points out another important point, seen from their perspective:
– Our and others’ experience is that it is always an advantage to have a strong domestic market if you are to succeed abroad, says Eriksen.
He says that Aker wants to contribute to building an entire value chain within offshore wind, with a broad and solid supplier environment – as Aker and Norway have managed with the oil industry.
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