Norway’s Don Quixote

This week’s pod looks at recent protests against onshore wind turbines in Norway, the reasons behind the opposition and the impact on the country’s energy mix and electricity prices. Is it NIMBYism or do the protestors have more widespread support? 

Hosts:

• Richard Sverrisson, Editor-in-Chief Europe, Montel. 

Guests:  

• Gert Ove Mollestad, Journalist, Montel, 
• Marius Holm Rennesund, Partner, Thema Consulting Group.   

Transcript

Richard Sverrisson, Editor-in-Chief Europe, Montel: 0:05

Hello listeners and welcome to the Montel Weekly Podcast. Bring New Energy Matters in an informal setting. My name is Richardson. I'm joined today by my colleague, GAT of a Moat who covers the Nordic region from Monte. And we are joined by Mars Home Cent. Analyst and partner at tema, an Oslo based consultancy. A warm welcome to you, Mari. Thank you. And, and welcome to you Gat. Thank you. Today we're taking a close look at the outbreak of protests, uh, against onshore wind in Norway. So. Where are the current protests and what are they protesting against Marius?

Marius Holm Rennesund, Partner, Thema Consulting Group: 0:39

Well, the, the, the most important part or the most, uh, vocal protests are around, uh, the N oh three area in the mid Norway, uh, has a very large project. It's the, uh, Northern Europe's largest project with around thousand megawatts of install capacity. But it's basically only one part of that pro of that project where you, you see protests. Mm-hmm. Uh, and that's, uh, a small island, uh, called Freyer.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:06

That's off Trondheim. It's got a mid Norway, is it? Yeah. It's mid Norway.

Marius Holm Rennesund, Partner, Thema Consulting Group: 1:10

For those who aren't

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:11

familiar with the NO three zone Exactly.

Marius Holm Rennesund, Partner, Thema Consulting Group: 1:14

But it, I think it's growing across Norway right now. The protests, we see it becoming more and more vocal. Mm-hmm. Um, and it's, it's kind of natural. It's first of the, you know, last two years that you really see wind developments in Norway. Mm-hmm. You see onshore. Yeah. Onshore. Mm-hmm. Uh, you've seen it in Sweden for quite some while, uh, without much protests, but in Norway it's, it's now the, the you've started to actually build. Mm-hmm. And when people actually see the windmills, they, uh, they, uh, uh, start to process against them.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 1:48

Absolutely. I mean, we'll come back to comparisons with neighboring countries a bit later, but. But what is it exactly they're protesting against? Do you think the, you know, you'd think, uh, clean, green energy that would be, would be welcomed, you know? Um,

Marius Holm Rennesund, Partner, Thema Consulting Group: 2:01

yeah. Well it's, it's basically a not in my backyard problem. It's in a way climate versus, uh, local environmental impact. And it's both in terms of, of the road construction, uh, and how it hurts local environment. Birds is important. Many don't want to see, uh, their win while from their, their cabin or their house. Okay. So that's also a part of it. So I, I think it's, it's kind of mixed specifically in that this project, uh, if you look at kind of the, the big lines there, or it's, it's more climate versus local environmental impact.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 2:40

So the main, the main reason is the impact on wildlife and, and not just visual, uh,

Marius Holm Rennesund, Partner, Thema Consulting Group: 2:45

not just visual. But building roads around very vulnerable, uh, areas that some field, these areas are, especially along the coast where it's very visible. It's important for, uh, for the protestors

Gert Ove Mollestad, Journalist, Montel: 2:59

and they also built kind of high in the landscape. Okay. So they, you will be able to see them from kind of very long distances.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:07

It kinda makes sense.'cause you want them to be built where, where, where it's windy, precise, there's not windy in the valleys. It's output the top. Precisely. And

Gert Ove Mollestad, Journalist, Montel: 3:14

it also triggers a lot of construction work. You have to build roads and you have to kind of Yeah. Use a lot of dynamite and, and heavy construction work for the roads. Mm-hmm. So you will. The claim is that this will be irr irreversible. Mm. Um, local

Richard Sverrisson, Editor-in-Chief Europe, Montel: 3:28

impacts. Yeah. To build this, uh, the windmills, but that's only in the initial phase. Surely once the roads are there, the impact will be less or,

Marius Holm Rennesund, Partner, Thema Consulting Group: 3:37

well, there's still visible, but I think there's two different waves of seeing it. Of course, they will still be there. Uh, there will still be, be some kind of local damage to the area. Uh, well, some reports also say that, you know, tourism, uh, increases, it's, the areas will be used more. Mm-hmm. Uh, by, by people who want to experience. Wildlife as well. So it's, it's a kind of a mixed picture there. Mm-hmm. But of course, in, in these open landscapes, it is, uh, easier to see the roads. It's easier to see, of course, uh, the windmills than in typical wooden areas. Uh, where I think the, the visual impact at least is, is less with the road construction.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 4:19

Absolutely. I mean, I've been, um, in stored and they have, is it the fit yard power company there? They have onshore wind. I mean, I'm just wondering why. Uh, why are the protests happening now? Because there, there have, there have been, I mean, onshore wind in, in parts, maybe isolated parts of nor mm-hmm. I'm just wondering why, you know.

Marius Holm Rennesund, Partner, Thema Consulting Group: 4:38

No, I think, I think it's now where the big development is happening. The plans has been there, they got their licenses and, and in that licensing process, that's really when you should have protested against it. People haven't done that. Uh, it wasn't expected that they would come so many projects and, and so early. Mm-hmm. Uh, I guess for some, uh, we've seen a, a rapid cost decrease. Uh, that means that more projects are now profitable. Mm-hmm. Uh, even without l certificates, that means. More projects coming online without subsidies? This without subsidies. Yeah. So it's, it's now that you actually see, uh, the visual impact, uh, and if you use fullness, an example again, the first wind parks, there are no up and running. Mm-hmm. Uh, so we actually see the, the physical impact from them. Uh, and it's the, the latter ones, uh, in that large project that the protests are, are happening.

Gert Ove Mollestad, Journalist, Montel: 5:31

And do you think that the, the rising resistance towards wind power in Norway could, uh, actually result in a stop in the new developments or new projects?

Marius Holm Rennesund, Partner, Thema Consulting Group: 5:38

I don't think we will see, see a stop, but I think, well, up until now, most projects have been realized by a project developer and then sold to an, a foreign financial company and, and often backed with a PPA with a consumer. Uh, and what we expect and, and have seen the start of now is that more of the regional utilities, this hasn't been investing in wind power, have now started to look at new projects and, and get and, uh, and are now allowed, allowed by their owner to actually invest in wind, which they haven't for some years. And that process might be not reversed, but, but we might not see that many local utilities being willing to invest in, in onshore wind when the protests are so, so large and the reputational risk increases. I just saw an interview with, uh, Staley Al, the chief of Tji, which owned this, uh, or are building this wind park where the protests are mo most vocal and he's stating that the public opinion, uh, about tr naji now might be changing, and that's the challenge for that.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 6:44

Have these protests taken. The company such as Trend, and you have, have they taken them by surprise?

Marius Holm Rennesund, Partner, Thema Consulting Group: 6:50

Well, well, it seems, uh, it has. I'm not sure they should be that surprised. I mean, things have been running smoothly for a while. Mm-hmm. But it's, it's now that you actually see the projects and you should expect at least some, uh, some resistance towards

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:05

it. Good point that you made there, that it's only when they're actually building them that the protests emerge rather than in the licensing phase, which to some would be slightly, slightly odds, you know?

Marius Holm Rennesund, Partner, Thema Consulting Group: 7:15

Yeah, yeah. It is odd. And then they should have started, uh, working against it if you are against it at an earlier stage, but I don't think they really realize the impact it would have. And it's easier when it's more concrete and you actually see, see what's happening to, to be more vocal and, and. You know, the, the protests have now, uh, delayed the, uh, the construction work for quite some time as well. Mm-hmm. So it's also cost energy. Quite a lot of money these days.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 7:43

So it's, uh, the Norwegian Don Coyote, if you like, uh, fighting against these windows. Yeah, exactly. I'm just wondering if it, if we're able to compare the protests that are happening now to what's happened against the, the, the, the expansion of hydro plants in the 1970s and eighties. Is, is that a fair comparison?

Marius Holm Rennesund, Partner, Thema Consulting Group: 8:03

Marius? I think that's a bit too. Early to say we've really now only had this one area where the protest has been very vocal, but it's now growing across Norway. Uh, and we see that new projects are are opposed as well. I mean, I'm, I'm a bit too young to have experienced Well, so, so we as well, of course. The large filters in the, in the seventies. Yeah. But I feel that, that some of them were, were even harder and, and more debated than what we see right now. Mm-hmm. Although the, uh, the wind power debate has been quite heated, uh, over the last few weeks actually. So it remains to, to be seen whether they, they continue and whether you can compare it, uh, when you look back a few years ahead, uh, to what you saw with regards to, to hydro in the seventies and eighties. Mm-hmm. But it's, it's, you know. Every project that has, um, a environmental impact, uh, will be opposed by, by some, uh, and, and not in my backyard. Problem will also be there. Whatever you do, whatever you build. So of course there will be protest posts against, you know, new hydro build outs, uh, as well, in a way, as well as as wind power.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 9:13

Absolutely. I think that's part of. Being, uh, living in a democracy in a way that everyone has to have their voice. Um, but do you think, uh, politicians, both local and national, are listening to, to the protesters? Are they taking any notice?

Marius Holm Rennesund, Partner, Thema Consulting Group: 9:27

I think they definitely are, especially, uh, at the national level. We have had the, the yearly meetings in the number of political parties over the last few weeks. Uh, and we see many of them, uh, are now more actively supporting offshore wind power. Okay. Uh, and said that, you know, we should build some onshore, but, but offshore should be the, the focus going forward. And that has been a, a large change. And, uh, and with the cost numbers you now see for offshore, that means they also will, will need to be willing to, uh, to support them financially if there are to

Richard Sverrisson, Editor-in-Chief Europe, Montel: 10:00

be built. Absolutely, we'll come back to offshore, I think later in the, in, in, in this pod. But is there a split between left and right in terms of the sort of anti wind or is it just a spread across the political spectrum? I mean, uh,

Gert Ove Mollestad, Journalist, Montel: 10:12

I would say it's spread quite across, uh, because you've seen the resistance both in the left wing party and all to the right wing party. And in the, in the grand, uh, in the, in the large conservative party, there was some. Suggestions, uh, for stop, complete stop of, uh, of, uh, onshore wind. That didn't get us a vote, but, um, but there are, there is a clear opposition in all parties across the board, I would say.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 10:37

So it's not a, a clear political split on this. There's no, there's just, you know, there's opposition and support within maybe all parties. Yes, I would say so. Do you expect. These kind of protests to, to happen more and more to become a widespread a across Norway. I mean, we've, they've been focused very much now in, in mid Norway. On, on and, and, and in the trend log and near Heim.

Marius Holm Rennesund, Partner, Thema Consulting Group: 10:59

Yeah. I, I would expect that we see it across the country. We've seen that, uh, a lot of these, you know, national organizations are active in this space, and, and you will see that spread across the, the country. And I think it's one important aspect that we haven't discussed is that. This coincides with when the, uh, Norwegian regulator actually published their, uh, their plan for where you can build onshore wind and where they pick 13 different, uh, geographical areas. Mm-hmm. Where they, where they think it's right to build wind, whether it's grid, there's suitable, uh, landscape, et cetera. And I think we are going to. C protests all across those, those areas. Mm-hmm. Uh, and, and this plan is out on a hearing process now. Mm-hmm. And I, I think it's gonna be a lot of focus on, on that hearing process. And eventually when they, they revise the plan. Mm-hmm. After the hearing process, what, uh, the results there will be,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 11:54

which 13 areas did they, uh. Did they kind of isolate or,

Marius Holm Rennesund, Partner, Thema Consulting Group: 11:58

or, well, it's, it's, uh, spread all across Norway basically. Okay. Um, so, so, you know, hence you will probably also see protests

Gert Ove Mollestad, Journalist, Montel: 12:07

all across Norway. Exactly, yeah, yeah, yeah, yeah. Maybe surprisingly little in northern Norway actually, where the wind resources. Is absolute the best. Mm. But they have a wind farms producing like 4,200 hours a year. Mm. So, but the grid there is a serious constraint. So that, that was one of the reasons that I kind of pushed a lot of the areas towards certain way because they're, you are closer to the interconnectors and also with a strong grid. So,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 12:34

and closer to, to demand centers as well. I suppose. There's not so much demand maybe in the north,

Gert Ove Mollestad, Journalist, Montel: 12:38

but then again there you have a dense population, so it's of course it's, it's gonna be tricky. Yep. Absolutely. To the next question where you have Sweden, which is very sparsely populated, especially in the north. Yeah. So could you, do you think you could see, uh, a shift that you won't have so much, uh, wind power in Norway and then that the bill, that the projects are coming in Sweden instead?

Marius Holm Rennesund, Partner, Thema Consulting Group: 13:05

Yeah. I mean, that, that could be a possible result. Uh, uh, definitely. Still the resource base is, is better in Norway. But, uh, with the technology development you've had, uh, over the last uh, few years, you see that you can produce more also in more wooden areas, which is, uh, what you see, what you have in Sweden. And many, I think also feels that the, the impact is, is smaller in wooden areas. Mm. Uh, you still see the windmills. They need to be very high and then areas of forests and Yeah, yeah, yeah. Okay. Yeah. So, so that also might lead to it being more, uh, or less unpopular to put it that way, to, to build in those areas. So, so you build it above the tree line,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 13:45

or, yeah. Yeah.

Marius Holm Rennesund, Partner, Thema Consulting Group: 13:46

Okay. Yeah.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 13:47

So visually it's maybe not such so, uh, so challenging maybe for some,

Marius Holm Rennesund, Partner, Thema Consulting Group: 13:51

yeah, no, uh, I would say, so when you, you. See also in Norway and then especially, uh, along the border towards Sweden, uh, some wind farms in, in, uh, more forest areas. Mm. And at least, uh, when I look at them, the, the, the whistle impact seems less. Mm-hmm. Okay.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 14:08

We, at Monte we're very, we. We want to look at the market impact of this. What does the expansion of, of wind do to to market prices and what's your outlook for, for, for the coming years as wind, wind capacity grows in the region?

Marius Holm Rennesund, Partner, Thema Consulting Group: 14:23

No, I mean, it definitely puts, uh, a downward pressure on prices. The more you build, the more supply it would have for basically the same demand. Uh, and that would push, push prices down. Uh, but there are some other effects as well. I mean, the, the lower power price might lead to some increases in, uh, demand as well. Mm-hmm. And have you got any numbers here, Morris, you can throw around? No. Yeah. I mean, it's, it's difficult to, to pinpoint exactly how much wind farm would push, uh, prices down. Uh, what we see is in, in the medium term power prices will still much be driven by, uh, gas. Coal and CO2 prices. Mm-hmm. Uh, but we will see a more switch from the short-term marginal cost of coal being the most important to more short-term, marginal cost of gas. And that's more because of the development elsewhere in Europe where you face out coal and you need to, to use more gas in the power

Richard Sverrisson, Editor-in-Chief Europe, Montel: 15:17

production. Yeah. We're seeing more and more fuel switching occurring in continental Europe. Definitely. So,

Marius Holm Rennesund, Partner, Thema Consulting Group: 15:22

yeah, so that, that effect, I think we will see, you know, up until. 2025, something like that in a medium term. Mm. In the long term, I think it's really the, uh, the long run or the investment cost for, for new wind that will kind of set a, a soft cap on power prices. Mm-hmm. You know, I think we, and, and most others have been taken by surprise of the rapid cost decrease, uh, for wind over the past. You know, eight years or so. Mm-hmm. Um, I think it will flatten out over time, but still it's difficult to see power prices over consecutive years at a much higher level than what it, the long run marginal cost of a new wind farm will be. Mm-hmm. Um, and what is that? Well, I suppose it varies, but of course the onset depends. Is the onset. Yeah. But. If you look at, uh, nvs number for example, they, they, uh, have the cost now at, uh, slightly below, uh, 40 euros. Mm-hmm. Between 35 and 40. So I think we're gonna slide down maybe towards the, the 35 euro, uh

Richard Sverrisson, Editor-in-Chief Europe, Montel: 16:24

mm-hmm. Level per megawatt hour, per megawatt hour.

Marius Holm Rennesund, Partner, Thema Consulting Group: 16:27

When that is said, I, I think you can still see a system price above that. And that's a reason for that. And that's what you often call the cannibalization effect. Mm. That a wind farm doesn't receive that average price. Mm-hmm. Uh, over the air because you have to produce when the wind is blowing, and then everybody else has to produce as well. Mm. Uh, and that pushes prices down so. The capture price, the price that the, uh, the wind farm actually receives will be lower than the average price in when it produces much.

Gert Ove Mollestad, Journalist, Montel: 16:57

And we did have an example, uh, Sunday this week when, when you have snow, uh, high snow melt now mm-hmm. Seasonally in Norway and Sweden, and then there was quite a windy day. So on Sunday, the area prices in Sweden fell to only 12 euros. Okay. Just below 12 euros. So you, you get this short term. Price drops. Mm-hmm. Uh, when, when the wind is blowing, and especially combined with the, with heavy inflow from, from making snow.

Marius Holm Rennesund, Partner, Thema Consulting Group: 17:22

Yeah. And, and that's the other factor. We, we might see, uh, more volatile prices. Mm-hmm. Okay. Uh, you will get very low when there's good precipitation and, and a lot of wind. Mm. Uh, and then you probably will go higher, at least in, in our view, we expect some higher gas prices. CO2 prices are high, but might increase in, in the long run at least. Mm. And then you get prices down, you know, towards zero. Mm-hmm. When it's windy. And then you can get very high prices, uh, uh, in those hours where there's less wind.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 17:54

Sure. But I think. In, given that kind of low price scenario or the increased likelihood that this will happen with more wind expansion and more wind capacity being built, what, what are developers pricing this in? I mean, this is quite a low price. This is, there's a high risk of, of, of very low prices.

Marius Holm Rennesund, Partner, Thema Consulting Group: 18:11

Yeah. I think they are, at least we've seen a focus now where they are much more, uh, preoccupied with the cannibalization effect. Mm-hmm. Uh, we have a number of clients where we run sensitivities. Uh, on the cannibalization and, and in different price areas 'cause it will vary between areas because you're more or less wind. But also because the interconnections to other areas, uh, is good or bad or it's, uh, high or low. Uh, so, so I think investors more and more are looking into this. Definitely. On the other hand, you also, most of the wind farms that's been realized over the past few years have been backed with the PPA. Mm. Uh, so basically the investor has secured a, a fixed power price. So in, in. Negotiating this PPA, they should have, uh, paid, taken that into consideration, but that's of course nothing we see, whether they

Richard Sverrisson, Editor-in-Chief Europe, Montel: 19:04

do or not, so

Marius Holm Rennesund, Partner, Thema Consulting Group: 19:04

absolutely.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 19:05

Is this cannibalization effect is that? A reason why some, some Nordic hydropower producers haven't, uh, invested in onshore wind.

Marius Holm Rennesund, Partner, Thema Consulting Group: 19:14

Yeah, I think that's part of the reason. And, and for them all investments in, in, uh, new production capacity means lower prices for, uh, their existing assets. So I think. That's been why they've been reluctant, at least up until now, to invest in wind with the, I think the effect that they haven't really expected that somebody else actually, the, the foreign funds came in and took that market. Yeah. Yeah. So you will, you will get lower power prices still, uh, and you're not part of the game because you haven't done any investments and that's. Why I see, uh, more of the regional utilities now might be willing to, to do, uh, investments in, in onshore wind,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 19:54

potentially with a PPA as well, potentially

Marius Holm Rennesund, Partner, Thema Consulting Group: 19:57

with a PA. But in general, utilities, both, uh, Nordic and also the foreign utilities that has invested in, uh, in off onshore wind in, in Norway, uh, or Sweden, are better with handling power, price risk. And that's. What they made for a living. Right. So So that's the bread butter. Exactly. Yeah, exactly. So they rather trade that volume than do PPPA.

Gert Ove Mollestad, Journalist, Montel: 20:20

The question is, uh, there's a lot of potential for the Norwegian hydropower still, uh, especially when expanding the existing power plants. So, uh, and according to, uh, the new Professor Lele, and there's a potential of 22 to 30 OT hours. In existing Norwegian hydropower plants, so could, could, uh, could it be an easier solution to, to focus the investments towards hydropower instead of building wind power?

Marius Holm Rennesund, Partner, Thema Consulting Group: 20:46

Yeah, I think so. I mean, this is existing projects that you are rebuilding or, or refurbishing and, and do, uh, minor changes to them leading to, uh, to a much more capacity. And of course that's environmental wise, that's, uh, a something to do. Uh, so you might see that happening going forward. But I think what others have pinpointed and, and maybe the author of this report as well, is the, the tax incentives with this respect and, and. The way the tax regime is right now, it's not worthwhile doing those rebuilds, but of course. From the political side, uh, it might be they might be more willing to do changes to, to these tax regimes now when the opposition towards onshore wind is so large. So there might be a change there. And in, in many respects, it, it makes sense to do so.

Gert Ove Mollestad, Journalist, Montel: 21:38

Yeah. And there's a kind of a small committee. We're looking at the tech system for hydro power and also wind power in Norway. Yeah. Led by the. Former, uh, head of regulator, uh, NBE, he's called Paris Sand. Mm-hmm. And he's supposed to deliver his support in October this year. And, and so maybe we'll come back in October and discuss this again with you most, yeah. Yeah. And I picked up kind of, um, clear signals from different political parties that there has to be a makeover over the tech system and to be able to trigger the, the hydropower refurbishment in a way. Yeah. So.

Marius Holm Rennesund, Partner, Thema Consulting Group: 22:11

Yeah. And that's one side of it. The other side is, is the tax paid by onshore wind where you have no resource rent taxes as you have for, uh, for hydropower. So it's the, it

Richard Sverrisson, Editor-in-Chief Europe, Montel: 22:22

is a bit unfair. It's not exactly a level playing field. No,

Gert Ove Mollestad, Journalist, Montel: 22:25

not by, not by long shot,

Marius Holm Rennesund, Partner, Thema Consulting Group: 22:26

no. Okay. And, you know, that make have made sense when, uh, you needed to financially support, uh, with subsidies new, uh, onshore wind. But you know, when it's profitable, I think you. Might see a change also there. And even the, the Wind Power organization in Norway, uh, is suggesting to have a, a resource, rent tax on, on wind power as well. Okay. Yeah, that's, and that interesting. Yeah. It's, it is also to change the public opinion probably. Mm-hmm. I mean, if you give more back to your local community where, of course, where the wind farm is built, they might be more, more positive.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:01

Mm-hmm. For sure. Do you think this kind of modernization of Norwegian hydropower might lead to protests as well? Because you are, you are also changing the plants, aren't you? Uh, or is it, or is it, the impact is rather

Gert Ove Mollestad, Journalist, Montel: 23:12

limited because you're using the same dam.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:15

Okay. Or maybe

Gert Ove Mollestad, Journalist, Montel: 23:15

expanding it a bit, but there's no, there's no new nature that's sacrificed. Okay. So that's the, so

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:21

it's within the plant itself that, that you are change making changes to the infrastructure.

Gert Ove Mollestad, Journalist, Montel: 23:25

You're not, you're not DAMing down a new river. It's kind of using the same resources. Before. Fair enough. Fair enough.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 23:31

Um, how about the potential for offshore wind? I mean, you, you touched upon it earlier, Mario, so, and, and 'cause obviously, uh, some parts of Norway, as we know are very, very windy. Yeah. Um, so what, what's the potential here?

Marius Holm Rennesund, Partner, Thema Consulting Group: 23:43

There is not many reports looking at, uh, the full potential. And, and so that's remains to be seen. It's lodged. Definitely. Again, it depends on, on which areas you would like to open for, for offshore wind. Uh, I think the other challenge, uh, along the Norwegian coast is. That is deep. Mm-hmm. Uh, and most of the offshore wind we see today is fixed to the bottom, which you can't do in, in many places, uh, around Norway. So, so floating wind is, is what you would look at. Look at. Mm-hmm. And the cost for that right now is. Is higher than for, uh, for fixed bottom fixed wind.

Richard Sverrisson, Editor-in-Chief Europe, Montel: 24:18

Can you give some numbers here? Some certain, uh, ballpark figure?

Marius Holm Rennesund, Partner, Thema Consulting Group: 24:21

I think, well, it, is it twice the cost or, yeah. Okay. Almost twice the cost. At least 30, 40% more. So it depends, again, offshore wind is a more immature technology. Floating is even more immature. So, so you would expect caustic greases, but how much, how fast is, is the big question. Mm-hmm. But then again, if. Norwegian authorities are willing to subsidize because they rather would like to build offshore than onshore might

Richard Sverrisson, Editor-in-Chief Europe, Montel: 24:49

be. It's, um, yeah, it's all about the, the finance minister. How deep, deeper are the pockets of the finance minister? Exactly. Yeah. Quite deep.

Marius Holm Rennesund, Partner, Thema Consulting Group: 24:57

And I think also some of, of the Norwegian utilities. Might think that, you know, with the, the protest we see now, let's skip that, uh, that step and go directly to, uh, to

Gert Ove Mollestad, Journalist, Montel: 25:09

offshore. Mm. But it is worth mentioning that the start craft has been clearly against subsidizing offshore wind in a way. They, they don't want to use tax payers money to, with the result of even lower power prices in Norway. So you would, uh, from an economic standpoint, it seems. Not very, um, wise,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 25:31

while continuing the discussion about subsidies. Can these be built subsidy free? And what, what's the outlook for, you mentioned the L certificate, the electricity certificate market in, in, in the Nordic region. What's the outlook here, post 2020? Murray, could you give us some, some of your views?

Marius Holm Rennesund, Partner, Thema Consulting Group: 25:46

Yeah, I mean, with, with this current regime that's been proposed, the outlook is, uh, is not very good. Uh, we're looking at. More or less zero prices, or at least very low prices from the early twenties. For Serts? Yeah, for serts. So that won't give any support either to, to onshore or offshore. So you need to do changes either to that system or more likely other support mechanisms to to get offshore wind going. Mm. Uh, both in, oh, and there, there are a project also in Sweden already now you see in, in some markets that they have at least implicit subsidies because they get free grid connections, et cetera. And, and that's what we see around Europe is that in, in auction state, they bid in zero subsidy or, or zero, uh, add-on to the, to the power price. And, and that's because they get some implicit. Uh, subsidies in this, uh, that's at least one part of it. The other part is that it is often, you know, 5, 6, 7 years ahead, uh, until they need to build it. And the punishment for not building is, is not very severe. So it's basically a bet on high power prices and costs coming drastically down. Mm-hmm. Combined with, with some implicit subsidies

Richard Sverrisson, Editor-in-Chief Europe, Montel: 26:57

to, to, to rephrase that would be to say, well, if they have low prices, uh, low wholesale prices, or market prices going forward. Some of these are unlikely to be built.

Gert Ove Mollestad, Journalist, Montel: 27:06

Yeah,

Richard Sverrisson, Editor-in-Chief Europe, Montel: 27:07

yeah, yeah, yeah, that's,

Gert Ove Mollestad, Journalist, Montel: 27:08

we might see that, and I talked to the head of button file a couple month ago and he said, there will be no offshore wind farms in Sweden as long as they don't get the, the grid connection sponsored by

Richard Sverrisson, Editor-in-Chief Europe, Montel: 27:19

public. Of course, that's another, another factor to the grid connection. A fascinating discussion. Thank you very much, Maris. Thank you very much. Gut. I'm sure we'll come back to this and, and we'll invite you again on the Monte Pod Maris. So that's about all for now. Next week I'll be putting, uh, live from the Euro Electric conference in Florence. But please keep up to date with all our stories on ELL news. Follow us on Twitter at LinkedIn, and subscribe to this podcast on iTunes and Spotify. Thank you. Goodbye.