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Onshore Wind Opportunities for Foreign Investors

NORWEA expects most of the short-term growth in wind production will come from the mainland. Part of the expected rise from 1 TWh to 6-8 TWh by 2020 will be realized with the help of foreign funding.

The anticipated rise in onshore wind projects is incited in part by the EU Renewables Directive and the green certificate incentive scheme with Sweden that came into effect last year, says Lars Løken Granlund, Norwegian Wind Energy Association (NORWEA) communication advisor. It is also easier to build onshore than offshore, both commercially and technology wise. Together, these drivers will increase the current installed capacity from 750 MW to 3,000 MW and call for NOK 30 billion ($4.9 billion) in future investments, helped in part by international investors.

 

“It’s difficult to say whom and when,” says Andreas Thon Aasheim, NORWEA advisor in grid and infrastructure. “But with a rough estimate of NOK 30 billion needed by 2020, Norwegian utilities don’t have that type of equity. We see the same type of development as has been seen in Sweden, with investors from Google to pension infrastructure funds.”

 

Large Projects Ahead

 

So far, two Norwegian onshore wind projects have been realized as a direct consequence of the green certificate program with Sweden. The first, Åsen 2 developed by Solvind Åsen, started production in 2012 with two wind turbines at 3.2 GWh. The second– and much larger -- was Midtfjellet phase 2, completed by Midtfjellet Vindkraft in September. With a total of 44 windmills, Midtfjellet Vindkraftverk will produce 350 GWh annually, enough to power 17,5000 households.

 

The next one expected for development is a cluster of five wind parks in the counties of Bjerkheim, Hå and Gjesdal in southern Norway. Norway’s Ministry of Oil and Energy last year granted concession to the onshore project representing an installed capacity of 400 MW and an annual production of 1.3 TWh. Agder Energi, Dalane Energi and Lyse Energi will together develop 43 windmills at Bjerkreim with 450 GWh of annual production by 2016.

 

However, the largest future project by far will be the planned development of eight wind parks in Fosen by SAE Vind, Sarepta Energi, and Zephyr. The project for 1300 MW in new wind power and 3.7 TWh in renewable energy stands out as one of the world’s biggest wind power projects. With a total expected investment of about NOK 20 billion, it could be one of mainland Norway’s largest investments, spurring the need for foreign capital investments.

 

“(Fosen) needs to probably get somebody in,” says Marius Holm Rennesund, senior energy consultant at THEMA Consulting Group. “Some hedge funds and infrastructure funds, pensions, are getting into Swedish onshore wind, so that’s a development that we might see here.”

 

Foreign Funding

 

There are already many examples of Norwegian projects where international companies have taken significant stakes. Japan’s Eurus Energy Holding Corporation is a partner in the Høg-Jæren EnergiPark I and II windparks in the county of Rogaland. Zurich Municipal Electric Utility has a 20% stake in Jæren Energi, which is also involved in Høg-Jæren. In the future, Germany utility company E.ON might also take a stake in Norwegian onshore wind projects.

 

Mark Porter, E.ON director onshore Northern Europe, said in a presentation January 2013 in Oslo that its expansion in Sweden indicated a “strong and untapped potential” for greenfield onshore projects in the Norwegian inland. He cited in particular the large potential in three clusters: mid Norway (850 MW), east Norway (465 MW), and south Norway (200 MW).  He believed projects with lower speed in inland were now possible because turbine development and existing infrastructure had decreased investment costs.

 

“Norway has better wind conditions than its European neighbors, 1.5 times that of Germany and better than neighboring Sweden because of its higher altitude and long coastline, where most of Norway’s onshore wind projects are located,” says Granlund.

 

Interconnectors Open Up

 

Another boost for Norwegian wind projects will come from the expected building of new grids to the Continent. Norway is currently linked via subsea power cables to the Netherlands and Denmark through NorNed and several interconnectors to neighboring countries, all with Statnett as partner. The country currently exports 1,700 MW of capacity to the Continent and 3,500-3,700 MW to Sweden.

 

Norway’s Statnett plans to spend NOK 5-7 billion in annual investments over the next decades in future infrastructure investments, according to its strategy plan presented in October 2013. This includes the 700 MW interconnector Skagerrak 4, stretching from Norway to Denmark, built together with Energinet.dk. Scheduled for start-up in December 2014, this would mark Statnett’s fourth subsea cable from Norway to Denmark.

 

Statnett also has tentative plans to build the 1,400 MW interconnector to Germany Nord.Link with Dutch transmission system operator TenneT and German state financial institution KfW by 2020 and the 1,400 MW link to UK NSN by 2022 together with National Grid. However, the British have expressed interest in building interconnectors in a rival project called NorthConnect with Norwegian utility companies Vattenfall, E-CO Energi, Agder Energi and Lyse.

 

Projects like NorthConnect have become more of a possibility after the Norway’s new Conservative-Progress party government last October promised a reversal of the state monopoly with Statnett on building power export cables. Under the previous system, foreign companies were prohibited from owning and operating power interconnectors between Norway and the rest of Europe without having Statnett as partner.  

 

“This is probably a way of getting new project ideas up, rather than realizing them,” says Rennesund. “It could potentially open for foreign participation.”

 

 

(Image credut: Åsen 2, developed by Solvind, was the first Norwegian onshore wind project realized as result of the green certificate program with Sweden, Solvind)

 

 

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