OSLO (Reuters) – Energy major Shell may yet pull out of an ongoing tender for Norway’s first commercial offshore wind farm, with question marks remaining over the project’s profitability, the company’s country manager said.
Shell, which is part of a consortium with two local Norwegian utilities, has applied for pre-qualification to build Norway’s first bottom-fixed offshore wind farm at Soerlige Nordsjoe II, in the North Sea.
However, the business case was “not looking great”, Shell’s Norway country manager Marianne Olsnes, told an energy conference in Oslo on Wednesday.
“We might not bid,” Olsnes said during a panel discussion.
While no final decision has been made, the tender conditions were “very challenging”, Olsnes told Reuters on the sidelines of the event.
Energy companies were asked to develop certain parts of the project that are usually handled by grid operators, while the power is to be delivered to a market that is not interested in higher-cost electricity, she said.
“But of course, we are not done with the pre-qualification, so we don’t even know whether we are still in the game,” she added.
The tender offers the opportunity to build bottom-fixed wind turbines with a capacity of 1.5 gigawatts (GW), in what Norway hopes will be the starting point for massive offshore power developments in the years leading up to 2040.
Despite an offer of subsidies amounting to 23 billion Norwegian crowns ($2.17 billion), industry representatives and lobby groups still question whether this is sufficient.
The global offshore wind industry has been struggling with soaring inflation, interest rate hikes and increased costs in the supply chain.
Olsnes said she did not rule out that Shell might still be interested in a planned floating wind tender or future offshore wind auctions.
($1 = 10.5869 Norwegian crowns)
(Reporting by Nora Buli, editing by Terje Solsvik)
Comments