Menon Economics has conducted the analysis on behalf of the Norwegian Offshore Wind Cluster in collaboration with Export Credit Norway, the Federation of Norwegian Industries, the Norwegian Shipowners’ Association, GCE NODE, Haugaland Vekst and Greater Stavanger.
This is the first time the value creation potential associated with the development of a Norwegian-based floating offshore wind industry has been analysed.
The analysis show that the Norwegian-based industry for floating offshore wind has a value creation potential of between NOK 69 and 117 billion, with a possible employment effect of between 74,300 and 128,400 full-time jobs. Menon Economics has based the analysis on a subsidised development of two 500 MW floating offshore wind farm developments during the 2020s, and a Norwegian market share in floating offshore wind of 80 percent domestically and 20 percent globally.
While the market for fixed foundation offshore wind is dominated by international players, floating offshore wind is a relatively immature but rapidly growing market. This offers opportunities for Norway to take a leading position and capture significant market shares.
“Norwegian oil and gas players have been working with technology relating to floating installations for a number of years, and the Norwegian oil services industry is world leading. Capitalising on this expertise will be an important premise for the emergence of a Norwegian-based industry relating to floating offshore wind”, says Gunnar Birkeland, CEO of UNITECH Offshore and chairman of the Norwegian Offshore Wind cluster.
According to the Menon analysis, the total turnover for floating offshore wind is expected to be between NOK 1,900 and 3,400 billion globally in the period between 2020 and 2050.
Success dependent on domestic market
The analysis has further identified four factors that are considered essential for realising the value creation and employment potential for Norwegian businesses: An active domestic market, taking a leading role in the development of floating offshore wind, a clear vision from the authorities, and tailored public support tools to realise floating offshore wind developments.
“Norway is dependent on an active domestic floating wind market on the Norwegian continental shelf in order to establish a value chain of suppliers, build expertise and knowledge, obtain reference projects as a basis for export, and to have an arena for piloting new solutions. Similar to what we have done in the oil sector when building a world-leading offshore and maritime industry”, says Stein Lier Hansen, CEO of the Federation of Norwegian Industries.
In 2009, Norwegian players built the world’s first pilot project within floating offshore wind, Hywind Demo. Today, Equinor plans to develop a floating offshore wind farm on the Tampen field. This project could form the basis for the development of a Norwegian-based industry and function as a stepping-stone towards the commercialisation of floating offshore wind technology. However, Hywind Tampen alone will not provide the Norwegian supply industry with the experience it requires to succeed internationally.
“The history of fixed foundation offshore wind shows that it was the early movers amongst companies and nations who today hold a dominant market position. It is essential that Norway initiates several floating offshore wind farm developments to allow the industry to capitalise on a ’first mover advantage’ role, which is up for grabs”, says Harald Solberg, CEO of the Norwegian Shipowners’ Association.
Wants clear signs from the authorities
A key prerequisite for realising the value creation potential in a domestic market for floating offshore wind, is that Norwegian players dare to invest significant funds in projects that provide a learning curve effect by further developing and / or modifying their services and products.
Feedback from industry players is that they expect clear signs from Norwegian authorities that they want to establish a floating offshore wind industry in Norway. The same industry players also request a holistic and explicit strategy from the Norwegian authorities
The same players also demand an assessment and clarification of public support schemes and framework conditions to make a large-scale development financially viable.
“Floating offshore wind has enormous export potential, and export-oriented jobs generally generate high value creation. Effective use of policy instruments is likely to be important enablers to allow the Norwegian value chain to take part in the commercialisation of floating offshore wind and thereby build international competitiveness in a growing market. We want to contribute to make this happen”, says Otto Søberg, CEO of Export Credit Norway.
Published 17. Sep 2019