Shell reconsidering bidding in Norway’s offshore wind farm

Shell may consider backing down from the tendering process of Norway’s first commercial offshore wind farm, due to concerns about the project’s profitability, according to Reuters citing the company’s country manager.

Shell has applied for pre-qualification to construct Norway’s first bottom-fixed offshore wind farm at Soerlige Nordsjoe II in the North Sea. Notably, the British energy company is a member of a consortium that includes two local Norwegian utilities.

However, Marianne Olsnes, country manager for Shell in Norway, stated that the business case was “not looking great” during an energy conference in Oslo on Wednesday.

“We might not bid,” Olsnes stated during a panel discussion.

On the sideline of the event, Olsnes told Reuters that the tender conditions were “very challenging,” though no final decision has been made.

According to her, energy companies were asked to develop specific project components that are typically managed by grid operators. The power is intended to be supplied to a market that is not interested in purchasing more expensive electricity.

“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 further said.

The tender provides the chance to construct 1.5 GW of bottom-fixed wind turbines, which Norway hopes will serve as the foundation for significant offshore power developments in the years preceding 2040.

Industry representatives and lobby groups yet continue to doubt whether subsidies worth 23 billion Norwegian crowns ($2.17 billion) are adequate.

The offshore wind industry has been facing significant challenges due to rising inflation, rising interest rates, and increased supply chain costs.

Olsnes stated that she did not completely rule out the possibility that Shell would still be interested in future offshore wind auctions or a planned floating wind tender.