Norway announced on Monday that it had launched the first phase of its much-anticipated inaugural floating wind auction, and offered subsidies to the winning bidders despite the challenges facing the offshore wind industry worldwide.

In the face of rising costs, increased interest rates, and supply-chain bottlenecks, governments have been forced to postpone or cancel tenders because bidders are not interested.

The first stage of the process involves awarding bidders the right to develop commercial projects with a maximum capacity of 500 megawatts at the Utsira Nord location off the south-west coast.

The winning projects will have to mature for two years before they can compete in an auction to receive direct grants in 2028-2029.

Terje Aasland, Norway's Minister of Energy, said that "Utsira Nord represents an important step forward in the development and commercialization of floating offshore wind energy on the Norwegian continental shelf."

The Norwegian government has agreed to cap the total amount of subsidies for Utsira Nord's construction at 35 billion Norwegian crowns (3,37 billion dollars), which reflects the relative infancy of this technology.

Aasland stated that the model for allocating projects areas and state assistance is tailored to floating offshore winds and will contribute both to technology development and to cost reductions in subsequent projects.

Norway does not belong to the European Union, but it participates in its internal market. This requires that Norway comply with EU regulations, including those on state aid. The EFTA Surveillance Authority (ESA) manages this process.

In April, the latter approved Norway's request to tender land suitable for floating wind farms at Utsira Nord.

The floating wind turbine is a good option for deeper water where it's not possible to fix the foundation in the seabed.

Norway will announce new tenders in 2024, but it will only focus on the development of floating wind farms.

(source: Reuters)