By Otto Søberg and Ivar Slengesol, Export Credit Norway
The Norwegian renewables industry is not lacking in supporters to cheer it on, be they politicians, interest groups or others wishing to promote green exports. Export Credit Norway is one of these supporters. While it is important tohave cheering fans on the sidelines, it is the players on the pitch who have to score the goals. To win games, and hopefully the league, teams need a clear strategy and large squad of players. The latter is something we lack in Norway.
The Norwegian renewables supply industry includes several successful companies, and achieved international equipment and service sales of NOK 11.4 billion (USD 1.4 billion) in 2017. An analysis conducted for Export Credit Norway by Menon Economics indicates that NOK 6.2 billion of this total comprised pure exports, while the remaining NOK 5.2 billion represents sales by Norwegian-owned foreign subsidiaries.
These are promising figures for Norwegian suppliers
Otto Søberg and Ivar Slengesol, Export Credit Norway
These are promising figures for Norwegian suppliers, who are performing strongly in the offshore wind and solar energy segments and have boosted their international sales in recent years. Norwegian businesses are technological leaders in several market segments.
However, a global comparison gives a different perspective on Norway’s export figures.
According to Bloomberg New Energy Finance’s updated New Energy Outlook, published in July this year, some USD 11.5 trillion – i.e. USD 11,500 billion – is forecast to be invested in new power production globally in the period to 2050. Some USD 8.4 trillion of this total is expected to be channelled into new wind and solar energy facilities, while USD 1.5 trillion will be invested in other zero-carbon technologies such as hydropower and nuclear power.
A lack of critical mass
Compared to USD 11,500 billion, NOK 12 billion/USD 1.4 billion in annual exports from Norway is a small figure. This summarises the primary challenge – despite positive developments, the Norwegian renewables supply industry has not yet achieved critical mass.
International rankings also indicate unrealised potential. According to the Global Cleantech Innovation Index, Norway has the world’s largest research and development (R&D) budget for clean tech relative to gross domestic product (GDP). Global R&D investments would be quadrupled if all countries spent as much in this area as Norway, relative to GDP. However, in terms of sales and earnings, the results achieved by Norwegian businesses are mixed.
Norwegian exporters of goods and services for the renewables sector are generally standalone sub-contractors in international supply chains. Collectively, Norwegian suppliers to this sector have a global market share of approximately 0.4%. Offshore wind power, with its global market share of just under 5%, pulls up the average.
A larger squad of players is needed
Our aim in writing this article is not to disparage Norwegian renewables exporters. On the contrary, the current NOK 12 billion export total reflects their success in taking the lead in their segments. Examples include Fred. Olsen, DNV GL, Nexans Norway, Elkem, Scatec Solar and others who have demonstrated impressive drive and the ability to invest in and penetrate these markets almost singlehandedly. These companies’ pioneering efforts provide a platform for further expansion of the Norwegian renewables industry.
The Norwegian suppliers who service the renewables sector can be compared to a football team – they include some good players – like those mentioned above – and have a sizeable group of supporters. However, the squad is not large enough for Norway to play in the very highest leagues. We want to do something about this.
In recent years, the Norwegian Government has published several reports and strategies that examine how Norway should market green Norwegian solutions and strengthen its knowledge clusters. Both the white paper on a greener, smarter and more innovative industry and the strategy for green competitiveness address the issue, but are unspecific as regards concrete targets for exports of equipment and services for the renewables sector.
This is why we want to define clearer targets in consultation with the authorities and industry actors, to provide a basis for a national export strategy for renewables exporters. The main objective is to capitalise on the expertise of more and larger businesses, and to encourage capital investment in green businesses. For example, the Federation of Norwegian Industries, the Norwegian Shipowners’ Association and the Norwegian Wind Energy Association (NORWEA) have adopted the target that Norway’s share of the international offshore wind power market should reach 10% of total deliveries by 2030.
We would like to see such clear, long-term objectives adopted for all renewables segments. This would force all relevant stakeholders to be even more specific about what strategies and targets are required to achieve these aims. This in turn would allow Norway to capitalise more quickly on the massive international growth opportunities that are available.
Critical mass is key, but cheering from the sidelines alone will not give Norway the large squad of players it needs.