Offshore renewable energy production; -possibilities and challenges

Speech by the State Secretary Per Rune Henriksen, at the British Embassy and Norwegian Polytechnic Society conference on the British Norwegian Green Energy Revolution.

Good afternoon, ladies and gentlemen. I am pleased to be here at Håndverkeren today, and I am excited to speak about offshore renewable energy. I believe offshore renewable energy will contribute to reducing carbon emissions, it will improve the security of energy supply and it will give us business opportunities.

There are several reasons why we in Norway see a great potential for the future of renewable energy production offshore
o There is a great energy potential in the Norwegian maritime zone.
o Our electricity production is based on hydro power with large reservoirs, which are ideal to balance the intermittent wind power
o We have more than 100 years of experience from hydro power, and 40 years of experience from our offshore petroleum industry. We also have experience from shipping and the maritime sector.

This unique combination has made us increase our efforts in this field.

Great energy potential
As the energy potential in the Norwegian maritime zone is great, and the interest in offshore renewable energy is increasing, we knew at an early stage that it was important to establish a legal framework and map the resources to provide a sustainable development in the future. In March this year, the Norwegian parliament passed the Government’s proposal of a new act and strategy on offshore renewable energy. When framing the act, the Norwegian government studied other offshore wind regimes, amongst other the UK, to learn from your experiences and processes.  The proposal includes a national strategy on offshore renewable energy, and it states that the right to exploit offshore renewable energy resources rests with the Norwegian state.

As part of the strategy, a process of identifying sea areas suitable for future development of offshore wind power has been initiated. At the moment, a group of relevant directorates lead by the Norwegian Water Resources and Energy Directorate are about to complete the first screening of possible sea areas for offshore wind. During their work, they have been on an educational trip to the UK, and have exchanged experiences in the field of GIS with the Crown Estate. We do highly appreciate this cooperation between our two countries. We will continue the spatial planning process by initiating a strategic environmental assessment (SEA), probably during 2011. When this is completed, the Government will decide on opening sea areas for applications.

Hydro power
Norway is fortunate to also have a great renewable energy potential onshore. We are Europe’s largest and the world’s 6th largest producer of hydropower. Large reservoirs secure the production during cold and dry winters. Close to 50 per cent of the reservoir capacity in Europe is located in Norway. With the large reservoirs, hydropower represents a flexible battery for energy supply.  Thus, hydropower is well suited to balance intermittent renewable energy sources like wind.

Opportunities for an experienced industry (including international cooperation).
Offshore wind power is an area where we see a great potential for co-operation between the industries of UK and Norway. When it comes to offshore wind capacity, UK has become a leading country in the world. This is an impressive achievement.

In order to build a sustainable industry, we need a market big enough for the industry to capitalise on technology development. Today the Norwegian market for offshore wind technologies is still at an early stage. To obtain economies of scale and to reap the benefits from a wider customer base, I think the industry is wise to seek business opportunities abroad.  Besides, finding solutions to pressing industry challenges cannot be done in isolation. Thus, we have to look beyond national borders.  This is why the Government of Norway would like to facilitate the internationalisation of the Norwegian renewable energy sector. To this effect we have established INTPOW – Norwegian Renewable Energy Partners.  INTPOW is a private-public partnership whose industry partners represent the entire renewable cluster. It goes without saying that UK is a priority market for INTPOW, especially for offshore wind. INTPOW has facilitated seminars in Oslo and in Liverpool with the aim of presenting Norwegian capabilities and identifying joint business opportunities with British companies. I would like to commend the Crown Estate and Renewable UK for invaluable support in making these events successful.

As you are aware, Statkraft and Statoil are already developing the offshore wind park Sheringham Shoal off the coast of England. They are also taking part in the consortium Forewind that has the rights to develop a major offshore wind park in the Dogger Bank area. 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 are important. We appreciate very much the leadership shown by UK in this respect. 

I think there are two particular challenges that our industry can work together in tackling;
- Rising  production costs
- Constraints in the supply chain capacity
I think production costs will come down as the industry expands and the industry reaps the benefits of learning by doing effects. Also new technologies allowing for the use of larger turbines will contribute. With regard to supply chain constraints, I am hopeful that by working together across the North Sea borders the base of suppliers and service companies will be larger. This creates more competition that will help reduce costs and stimulate innovation.  But just as important is the possibility of achieving more efficient supply chains as gaps can be filled from available capacity in both countries.

Several companies 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. 
- A year ago 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.
- Aker Verdal and OWEC Towers also have their roots in the petroleum industry. They have ventured into the offshore wind industry. Aker Verdal has already delivered six offshore mounts to Alpha Ventus in Germany, and recently got a contract for 48 mounts for Farm Nordsee Ost, also in Germany. OWEC Tower delivered two subsea constructions for offshore windmills to a pilot project in Britain. The windmills are applied in connection with the oil field Beatrice. OWEC Tower will also deliver equipment to be used for an offshore wind park in Irland  (“Ormonde” – 30 turbines). This is an example of the international cooperation going on in the business. International cooperation brings new ideas from different perspectives and I think we will see more of this.

Many of the countries in Northern Europe have ambitious plans about offshore wind energy production. It is important that the countries that have adjacent areas suitable for offshore energy generation cooperate. Norway has thus, along with UK, joined the North Seas Countries’ Offshore Grid Initiative in February, an initiative where also eight other northern European countries participate. Even if an integrated offshore grid still lies quite far into the future, it is important that the governments, regulators and TSOs cooperate well, so that we can have a coordinated and efficient development of the offshore grid.

International cooperation is also an important tool in the new renewable directive. Norway is now in a process of preparing a draft of the common EFTA position on the new renewable directive. The government gives high priority to the promotion of renewable energy and energy efficiency. We consider the cooperation mechanisms in the renewable directive as interesting tools to combine national efforts with realistic possibilities for new renewable capacities. We already have an agreement with Sweden establishing the principles for a common market on green certificates from January 2012. However, we believe that common effort will also become vital for the development of offshore energy and future grid system in the North Sea.

We are very pleased with the statement on Climate Change and Energy Security that UK and Norway signed on August 25th this year. We have agreed on encouraging the wind energy industry to exchange information on the development of offshore North Sea energy projects, and also to support the work on the feasibility study for an interconnection between the UK and Norway.
Many, if not most, of the opportunities and challenges related to offshore renewable energy are common for our countries. The joint statement is an acknowledgment of this and I believe that through cooperation the UK and Norway can gain benefits from the possibilities that offshore renewable energy represents.

Thank you for your attention.