Speech at INTPOW’s 1st Offshore Wind Supply Chain Conference

Opening address by Ivar Vigdenes, Political Adviser, Ministry of Petroleum and Energy, at INTPOW’s 1st Offshore Wind Supply Chain Conference in Oslo, 23.03.2010.

Ladies and Gentlemen,
First I will like apologize for this late change in the programme. The Minister regrets very much that he could not attend this morning, due to unforeseen and pressing commitments.

Today’s seminar on offshore wind is a very timely event. The North Sea offshore wind resources are substantial and many countries have developed ambitious plans for exploiting them. This is a window of opportunity for the Norwegian offshore wind supply industry.

Furthermore, the event coincides very well with the Norwegian Parliament’s recent enactment of a major new piece of legislation on the development of offshore energy.

Before I move on I would like to thank Intpow, the organizers of the seminar. The Minister had the pleasure of giving the opening address at the official launching of Intpow in June last year.
Intpow is charged with the important task of promoting renewable energy capabilities in international markets.  The Ministry is a partner and sponsor of Intpow.

Global perspective – the role of wind power
In a global perspective, one fifth of the population lacks access to electricity. At the same time the world faces a serious climate change challenge, which to a large extent is caused by the increasing demand for energy. The twin challenges posed by climate change and securing enough energy for people are probably the most important challenges of our lifetime.

Increased use of renewable energy is one very important part of the answer to these challenges.

Currently, renewable energy provides about 18 per cent of the world’s electricity. There is a substantial potential for increasing this share, and because of its availability wind power will play an important role.

The world’s wind power capacity grew by 32 per cent in 2009, the highest rate since 2001. More than 38 Gigawatt were added, bringing the total installations up to 159 Gigawatt.

When it comes to offshore wind capacity, UK became the leading country in the world in 2009. This is an impressive achievement.

Even if the installation of offshore wind capacity is still relatively small compared to onshore wind, we expect the offshore wind market to continue to develop rapidly. The offshore wind potential is very substantial and wind turbines offshore seem to be more publicly acceptable than onshore. We do however need to get the technology and economy in these projects right. Here the Norwegian supply industry can play an important role building on our offshore competence.

Norway and Europe
Norway has been a major producer of hydropower for more than one hundred years. Hydropower’s share of our electricity production is close to 100 per cent. The result is that the share of renewable energy in Norway’s total energy consumption is higher than 60 per cent. We have in addition 40 years of experience from oil and gas development in the North Sea, adjacent to the UK sector.

Offshore wind power development is relevant for Norway because of three fundamental reasons:
• For the first, we have vast offshore wind resources,
• For the second, we have 50 per cent of Europe’s hydropower reservoir capacity and
• For the third we have the industrial know-how in important areas.

Through combining our hydropower storage capacity with stronger interconnections, offshore wind power from the Norwegian Continental shelf may become a major source of supply for clean electricity to Europe.

Government policies
Our vision is that offshore wind energy should become the next chapter in the great story of our energy industry. However, future large-scale development of offshore renewable energy production presents us with a number of challenges. The challenges range from technology development and economic viability to legal and regulatory issues.

We politicians must do our part, and so far we have delivered on a range of issues. To illustrate, I will highlight the following:

• Legal framework
An appropriate and efficient legal and regulatory framework is a necessary basis for developing this branch of the “green” energy sector.

We are very pleased that Parliament less than two weeks ago enacted the Ministry’s Draft Bill on Offshore renewable energy.  We are confident that this will be seen as a historic milestone 50 years from now. This piece of legislation will hopefully be compared to the concession acts for hydropower 100 years ago and the petroleum legislation put in place 40 years ago.
The new Act and the accompanying National Strategy point out the direction for the long-term efforts needed in the offshore wind power sector. We want to use this as a basis to develop new technologies and sustain a thriving energy industry.

• Offshore Grid Cooperation
There will be little utilization of offshore energy sources without a parallel development of a grid system that can transport the electricity. This is a challenge facing all nations.

International cooperation will therefore play an important role. This is in particular true for the countries around the North Sea. Consequently, nine European countries have signed the declaration «The North Seas Countries Offshore Grid Initiative». Last month, the Minister signed the document in which Norway joined the cooperation formally. The goal of this cooperation is to coordinate the development of an offshore grid in the North Sea and connecting installations on the mainland.

• Research and Development
In order for offshore wind to be attractive, costs must be brought down. This is a challenge that has to be addressed by the industry. The public sector should also contribute through support for research, development and demonstration. The Norwegian Government’s research and development budget for renewable energy has increased from about 20 million Euros in 2007 to around 80 million today.

This includes three Centres for Environment-friendly energy research which target different aspects of the development of offshore wind energy.

In September 2009, the world’s first full-scale floating wind turbine – Hywind – was successfully started up by Statoil. The wind turbine is located southwest of Haugesund. Hywind illustrates how we may benefit from the knowledge we have gained from our petroleum industry.

Another offshore wind company, Sway, recently announced its plans to build and test a 10 MW wind turbine outside of Bergen. This will be the world’s largest.
These demonstration projects have received support from the Government.

The North Sea region
The North Sea region is a good place to develop offshore wind resources.  The resources are vast and the geographical location is excellent with relatively close distance to the major European energy markets. 

The two largest Norwegian energy companies, Statkraft and Statoil, together with two other major energy companies, have formed the consortium Forewind. This consortium recently got the rights to develop a major offshore wind park in the UK.
These rights in the Dogger Bank area cover by far the largest area in licensing Round 3 with 9000 Megawatt. As the license holder, Forewind will now begin to carry out the extensive surveys, assessments and planning required for the consent process.

Statkraft and Statoil are already developing the offshore wind park Sheringham Shoal off the coast of England. Participation in such large developments will boost the offshore wind power competence for the Norwegian companies involved. If technology development shall pick up speed, large scale projects, as mentioned, are important. We appreciate very much the leadership shown by UK in this respect. 

There will be plenty of opportunities for British, Norwegian and companies from other countries when thousands of wind turbines are being built and installed offshore in the North Sea. To operate in this market, the companies have to be internationally oriented, competitive and flexible. With its offshore experience, the Norwegian supply industry should be very well placed to capture a considerable part of this growing market.

The wind energy sector has grown to become a major industry. According to the World Wind Energy Association, the global wind market for turbine installations in 2009 was worth about 50 billion Euros. By 2012 it is expected that the wind industry will employ more than 1 million people.

Several actors in this new offshore segment have their main business in the petroleum sector.  Their experience will especially be important in critical areas like installations, maintenance and modification. The offshore petroleum sector has shown a remarkable ability to cooperate through the whole value chain and develop new and more efficient technologies. 

By building on experiences from the petroleum and the maritime sector, we can develop a value chain that covers a broad specter of competences.

Måløy
Finally, I will like to mention my personal experience three weeks ago when the Minister and I visited Måløy, a small village on the west coast of Norway. Måløy aims at becoming a leading centre for wind energy. We were very impressed by the entrepreneurship and optimism we experienced.

In meeting new companies like EasyForm/BestMould, we could see how parts of the windmills can be designed and developed in a very efficient way. Stadt Towing Tank showed us a large hydrodynamic test tank with the ability to perform model tests in realistic sea and wave conditions.

The high-tech industries and all the young, enthusiastic people we met in Måløy gave us good reasons for optimism for the future of the industry. 

With this, I wish you good luck with the Conference and I hope you will enjoy fruitful and interesting discussions.

Thank you for your attention!