After the implementation of Section 2-3 of the Norwegian Ocean Energy Act in November last year, which states that the allocation of offshore power production locations shall mainly be based on a competitive procedure, the offshore wind industry has awaited further clarifications regarding the specific content of the competitive permitting procedure.

On 29 March 2023 this wait came to an end when the Norwegian government published notices for tenders for offshore wind locations within Sørlige Nordsjø II and Utsira Nord to developers of bottom-fixed and floating offshore wind projects, respectively.

The calls for tenders contain information regarding the allocation procedure, financial support and connection regime that will influence the developers’ bids for permits and financial support and which will be expanded upon in the following.

Bottom-fixed offshore wind in Sørlige Nordsjø II

Project area and tender Process

Pursuant to the call for tender concerning the development of the first phase of Sørlige Nordsjø II (“SN”), the competitive allocation procedure for SN will consist of two rounds:

(i)  a prequalification round; and

(ii) a subsequent auction for permits and financial support between the prequalified tenderers.

The first phase of SN will consist of one development area with a minimum effect of 1,400 MW and maximum 1,500 MW. The license for the first phase of SN will be awarded to only one applicant.

The call for tender in SN contains the following time schedule for the allocation process:

Period for submission of questions17 April – 1 June 2023
Deadline for submission of application for prequalification4 August 2023, 12:00
Expected publication of detailed auction rulesAugust 2023
Expected decision on prequalificationOctober 2023
Expected completion of auctionDecember 2023


Appendix 4 to the call for tender sets out objective criteria for the prequalification round that interested developers will have to satisfy to be eligible for the subsequent auction round. These criteria aim to demonstrate that the developer has the necessary financial and technical capabilities, as well as the required focus on sustainability, to realize the offshore wind project. They also aim to showcase whether the project will have a positive local knock-on effect for the offshore wind supply chain.

The three prequalification criteria for SN consist of the following:

Main Criteria Sub-criteriaDescription
Execution capability (Weighted 60%)
 Financial StrengthAs a minimum the applicant needs:

(i) an average annual turnover of at least NOK 40 billion over the last three years, and

(ii) Solidity (equity/total capital) of at least 20% in the annual accounts for the last three years or a credit rating of at least BBB- (S&P)/BBB- (Fitch) /Baa3 (Moody’s).

The turnover requirement will be assessed jointly for a consortium and the solidity requirement will be assessed for each of the members of the consortium. For consortiums the consortium agreement’s regulation of financial responsibilities will be included in the assessment of the consortium’s financial strength.

The financing plan for the projectThe financing plan shall be based on the project company’s equity at least shall constitute 20% of the estimated investment cost of the project.
The integrity of the project responsible (will only be rated pass/or no pass)
The competence of key personnel
The relevant experienceThe applicant needs at least experience from:

(i) a large-scale offshore wind reference project of at least 300 MW, and

(ii) (a) an offshore grid reference project based with HVDC technology and at least 300 kv voltage level, or (b) an offshore grid reference project based with HVAC technology and at least 220 kv voltage level, or (c) other relevant reference projects with comparable complexity and size.

HSE (will only be rated pass/or no pass)
The project conceptIt is noted that if the applicant can showcase that the project may be adapted to connection to and electrification of the Ekofisk oil field, if further assessments demonstrate that this may be an option, this will be weighted positively.
The project plan
Sustainability (weighted 20%)
Climate footprint
CoexistenceInter alia, the applicant need to have a plan for co-use with fishery and sea traffic.
Waste, recycling and reuse
Nature and environment
Positive local ripple effects (weighted 20%)
 Competence enhancementThe project shall contribute to competence development of the supplier industry and give incentives to use of skilled labour and apprentices.
Small and midsized enterprisesThe project shall contribute to small and midsized businesses obtaining experience with offshore wind.
Development of the supplier industryThe project shall contribute to Norway and Europe reaching their ambitions for offshore wind through development of the supplier industry in an economic sustainable way.

The Ministry of Petroleum and Energy (“MPE”) will first assess whether the applicants fulfil each of the main criteria and sub-critera. Thereafter each of the three main criteria are assessed based on a score between 1 to 10. Execution capability is weighted 60% and sustainability and positive local ripple effects are each weighted 20%.

A minimum of six, and a maximum of eight, developers will be able to prequalify for the subsequent auction.

Auction Process

The government has decided that bottom-fixed turbine developers will compete for permits for the single 1,400 to 1,500 MW development area and required financial support in an English reverse auction with public bids that is expected to be held in December 2023.

Consequently, prequalified developers will place bids for the lowest level of financial support required to realize their respective project within a predetermined time-period. The lowest bidder will be awarded development permits and the required financial support to develop its offshore wind project. If two bidders have the lowest bid, the license will be rewarded to the bidder with the highest score in the prequalification.

According to the tender notice further details on the auction process will be provided in August 2023.

Financial support

The financial support will be allocated to the successful developer in the form of a two-sided contract for differences (CfDs), where the support level will correspond to the support level in the winning bid.

To incentivize low bids for financial support the MPE suggests setting the maximum price/reservation price at 0.66 NOK/kWh. Further clarifications regarding the specific bidding procedure and timeline are expected in August 2023.

The successful developer will have to provide the state with a guarantee for its performance of the CfD of NOK 400 million as security for its liability for liquidated damages.

In the call for tender, the MPE furthermore states that more information will be provided regarding the specific terms and conditions of the CfD that the successful developer will enter into with the state.

Connection regime

The call for tender also contains general information regarding the offshore connection regime applicable to the successful developer. Firstly, it is decided that Statnett, the Norwegian onshore transmission system operator, will be charged with the same responsibility offshore.

Secondly, it is decided that the developer will plan, develop and own the connection to the onshore transmission similar to the applicable connection regime in the UK. However, unlike the connection regime applicable in the UK, the connection responsibility in Norway is not subject to a separate auction procedure to ensure that the connection is built at the lowest cost. Consequently, a substantial financial burden is placed on the developers that will manifest itself in higher bids for financial support.

In the event that the connection is reclassified as transmission grid, the connection has to be transferred to Statnett. According to the call for tender, the consideration and other terms for such transfer during the support period will be regulated in the CfD.

Floating offshore wind developers in Utsira Nord

Project areas and tender process

The procedure for allocating the three development locations in Utsira Nord (UN) for floating offshore wind developers will consist of:

(i) a qualitative competition, and

(ii) a competition for state funding

Each of the three project areas, which three applicants will be granted exclusive access to, will have a minimum installed effect of 460 MW and a maximum installed effect of 500 MW. MPE will assess the possibility of increasing each of the three development areas to up to 750 MW.

The notice for tenders contains the following time schedule for the allocation process for UN:

Period for submission of questions17 April – 1 June 2023
Deadline for submission of application1 September 2023
Expected allocation of project areasDecember 2023

Allocation round 1: Qualitative competition

The floating offshore wind developers will first compete on predetermined, objective and qualitative criteria. The qualitative criteria have the express aim of ensuring development and enhancement of Norwegian industry and work force, contribute to innovation and technology enhancement to reduce future floating offshore wind costs and increase zero-emissions power production in Norway. Consequently, the paramount criteria are the following:

Main Criteria (weight)Description
Costs level 2023 (Weighted 30%)The developer must have a realistic and as low as possible cost estimate for a 500 MW floating offshore wind project at UN set in full operation in 2030.
Innovation and technology development (weighted 20%)Potential for cost reductions.

The applicant must demonstrate measures for technology development, innovation and other cost saving processes which implies a project that is as cost-effective and competitive as possible in 2035.

Potential for distribution.

The applicant will be assessed based on possibility and measures of distribution and scaling of the most important technologies which the applicant project concept is based on.

Execution capability (weighted 30%) The same sub-critera apply for UN as for SN, provided that:

(i) Under the financial strength sub-critera and annual turnover of at least NOK 30 billion over the last three years is required (compared to 40 billion for Sørlige Nordsjø II), and

(ii) Under the requirement for relevant experience it is required that yhe applicant needs at least experience from one offshore wind reference project (could either be floating or bottom-fixed) of minimum 200 MW. If the applicant does not have experience with developing the grid for offshore wind, the applicant must showcase the relevant experience through reference projects for development, licence application processes, procurement, construction, operation and maintenance of other grid facilities of at least 66 kV.

Sustainability (weighted 10%)The same sub-critera for SN also apply for UN.
Positive local ripples effects (weighted 10%) The same sub-critera for SN also apply for SN.

As for SN, MPE will assess whether the applicants fulfil each of the main criteria and sub-criteria and award the project with a score between 1 to 10 for each criterium based on MPE’s discretion. The best project within each criterium will be awarded a score of 10. The score within each main criteria will subsequently be multiplied with the weight of the criteria to select the projects with the best scores.

Each of the applicants must rate their preferred choice of project are. The winner of the qualitative competition will be allocated its preferred project area, the second-place applicant will thereafter receive its preferred area and the third-place applicant will be receive the remaining development area.

Allocation round 2: Competition for state funding

As floating offshore wind projects are not yet economically profitable, state aid is required to incentivize investment and participation in the allocation of development locations on the quantitative criteria listed above.

The state acknowledges this by using two support measures. First, three successful candidates from the qualitative round are granted exclusive rights to the project location to mature their projects and minimize development risk. The term of this exclusive right is yet to be decided.

Secondly, the three successful candidates will compete for financial support in the form of two-sided CfDs within a capped budget. Under this capped budget, only two developers will be elected, which is intended to incentivize competition for the state funding. On the other hand, it will increase the risk of substantial sunken costs thereby increasing costs of capital and decreasing participation, and consequently competition, in the qualitative round. To mitigate some of these risks, the project that is not granted support will be granted an extension of its right to develop the project area and the government will propose that the project may participate in future competitions for state support for offshore renewable energy production, provided it is possible to structure a process securing competition for such support.

The state support for the projects at UN will be limited to 500 MW per project, regardless of whether it is opened up for an increase of the projects to 750 MW.

Connection regime

The developers will plan, develop and own the connection to the onshore transmission either through a coordinated solution for all three project areas or separate solutions for each project. MP underlines that the applicants may not assume that all circumstances related to the grid connection will be known at the application deadline which will contribute to the uncertainty the applicants will face in the tender process for UN.

Security over offshore wind assets and tax regime

Although the need for sufficient regulations on the possibility to establishing security over floating and bottom-fixed offshore wind assets to ease the possibility for the developers to obtain financing has been requested for a long period, the bid for tender does not provide any further clarity. However, it is noted that the MPE is working on establishing a legal basis for security in offshore wind licenses and assets under the Norwegian Offshore Energy Act.

Further, the government states in the calls for tenders that it will not introduce a resource use tax on bottom-fixed wind turbines nor on floating offshore wind turbines due to forecasted profitability of both technologies. However, no firm commitments are made.

Further information on the calls for tenders is available here:

CLP is available to discuss the details of the offshore wind licensing process. Do not hesitate to contact us with any questions.


Amund Berthelsen Erdal

Magnus N. Ryenbakken


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