Offshore wind is expected to become increasingly important in the global power market owing to decline in cost combined with technology advancements. Norwegian companies can capture significant shares both in domestic as well as global markets in the development, execution and operations of these offshore wind farms based on experiences in Norway and abroad. The study “Offshore Wind – Opportunities for the Norwegian Industry” was commissioned by Export Credit Norway and prepared by a consortium of THEMA Consulting Group, The Renewables Consulting Group (Nordic) and Multiconsult. It analyses the long-term potential for the Norwegian supply chain within fast-growing offshore wind industry. REGlobal provides the key findings and excerpts of the report…

While many countries are trying to position themselves as frontrunners in the nascent offshore wind industry, the decades-long experience from activities in the offshore oil and gas sector gives Norway’s industry a head start in specific value chain segments. Based on existing knowledge, the review of recent literature and the development prospects of offshore wind globally, an in-depth assessment of the potential of Norwegian players to capture market share along the bottom-fixed and floating offshore wind value chain is conducted.

In this report, the long-term potential for the Norwegian supplier industry in the sector is assessed by analysing two main questions:

• What is the long-term global market potential for investments in bottom-fixed and floating offshore wind power?

• What is the competitiveness and potential of Norwegian supplier companies within the various cost categories?

Norwegian industry market potential assessment

Uncertainty in the development of the Norwegian market share in different segments of the offshore wind industry is substantial, and thus there is a wide range of outcomes for the estimated potential turnover. Therefore, three scenarios have been developed for the turnover that could be captured by Norwegian industry players in the global offshore wind market through 2050: A Medium Base Case scenario, a High Accelerated Growth scenario and Low Slow Progression scenario.

These three scenarios have been developed to capture the inherent uncertainty (Low, Medium, High) on long-term value for the Norwegian industry under the three scenarios (Slow Progression, Base Case, Accelerated Growth). The Medium Base Case should be interpreted as an assessment of best guess market development. The High Accelerated Growth scenario provides an upside to this, both in terms of using the top of the expectation range and under the circumstances described in the growth scenario. The Low Slow Progression scenario contains a development path for the Norwegian industry that could be achieved with a high degree of certainty as it uses the lower range for each segment and assumes a development less favorable than our best guess.

The basis for this analysis are the market developments in the various regions which is converted to investment profiles per regional market and disaggregated into cost segments. In the Medium Base Case, floating and bottom-fixed offshore wind combined, total turnover for Norwegian players is estimated to represent 2.1 bn. EUR/year in the near term to 2025, increasing to 7.2 bn. EUR/year toward the end of the 2040s.

The distribution of bottom-fixed versus floating in expected offshore wind capacity build-out is reflected in the results of the analysis. Specifically, bottom-fixed offshore wind will remain the key source of turnover for Norwegian players, accounting for on average EUR 3 bn. in the 5-year period from 2026 to 2030 and EUR 5.3 bn. in the 2040s. Similarly, floating offshore wind makes up a mean of slightly below 800 MEUR/year in the 2026-2030 period and doubles to an average of almost 2 bn. EUR in decade leading up to 2050

There is significant uncertainty on both build volumes and the capacity at which Norwegian players can capture markets shares in the different cost segments. This is reflected by substantial span in expected Norwegian turnover in the High and Low Slow Progression outcomes. Specifically, in the High Accelerated Growth scenario, Norwegian players could capture up to 12.9 bn. EUR/year by the end of the forecast period, 9 bn. EUR/year of which is for bottom- fixed developments. On the other hand, in the Low Slow Progression scenario, Norwegian turnover is limited to 2.8 bn. EUR/year in the same period.

Medium Base case by region: The European market will remain the largest market for Norwegian players both for bottom-fixed and floating offshore wind. This region makes up for a mean turnover of 2.7 bn. EUR/year around 2030 and 3.7 bn. EUR/year in the 2040s or 72% and 51% of global opportunities for Norwegian players, according to estimates. Large-scale build-out of offshore wind capacity, political ambition, and close operational and cultural proximity explain this importance of Europe to Norwegian players.

South East Asia and North America follow in second and third place in terms of opportunities for Norwegian players in the global offshore wind market. These two regions represent a yearly average of 2.5 bn. EUR and 530 MEUR in the decade before 2050, making up 35% and 7%, respectively, of global estimated Norwegian turnover. Only smaller pockets of opportunity exist for Norwegian players in remaining regions as these together make up less than 498 MEUR annually in the period leading up to 2050 for floating and bottom-fixed offshore wind combined which is close to only 7% of estimated overall potential.

Accelerated Growth case by region: The relative predominance of the European market remains also in the Accelerated Growth case, as this region represents a turnover of more than 6.1 bn. EUR/year towards 2050. That means that close to 48% of the total market share for the Norwegian supply chain is in Europe. Opportunities in bottom-fixed offshore wind amount to 3.7 bn. EUR/year over the next five years. This sum rises to an average 9 bn. EUR/year in the ten years before mid-century. While floating offshore wind again does not play a role in the near term, more than 3.8 bn. EUR/year are expected to be harnessed by Norwegian floating offshore wind operations globally in the 2040s.

Low Slow Progression case by region: Bottom-fixed turnover in the Slow Progression scenarios sums up to a mere average of 903 MEUR/year in the period up to 2025. As most deals are inked in Europe and some in South East Asia, while all other regions have a smaller involvement from Norwegian industry, the average annual amount rises to 2.8 bn. EUR in the last decade in the period under consideration. The Low Slow Progression scenarios revenue-creating opportunities in floating offshore wind are estimated to increase and reach a total of 292m EUR/year on average from 2026 onwards until 2030. In the 2040s, the revenue potential rises to 549m EUR per year on average.

An introduction to Norwegian participation in offshore wind

Norway remains a niche offshore wind market compared to European counterparts. Nevertheless, a lack of home-market has so far not deterred Norwegian players from establishing key positions in select segments in the international market.Notable examples of this to date include:

  • In project development, through a range of project acquisitions and partnerships, Equinor is a leading global offshore wind project developer with presence in key markets including Germany, UK and the US, with developments in more countries on the horizon. The firm is spearheading the deployment of floating offshore wind technology as its Hywind technology remains the most deployed floating offshore wind technology worldwide.
  • In equipment manufacturing, French-owned Nexans boasts substantial production capacity in Norway and is a well-established supplier of export, inter-array, and onshore cables for offshore wind developments. Other notable Norwegian equipment manufacturer serving offshore wind include Aibel and Kværner in the substation platforms and substructure segments.
  • In the diverse Engineering, Procurement, Construction, and Installation (EPCI) segment, a range of Norwegian players with roots in oil and gas and maritime industries have established key positions. These include Fred. Olsen Windcarrier, specializing in wind turbine installation, and players such as Solstad and Offshore Heavy Transport (OHT), both recently announcing sizable contracts for services in the international market.

As such the Base Case already take account for an already positive market development within the Norwegian offshore wind supply chain. However, a range of drivers and inhibitors shape the offshore wind market environment within which the Norwegian supply chain are seeking to secure market shares in the future. 

Key drivers/challenges for Norwegian market shares in offshore wind

Norwegian players currently face an appealing “window of opportunity” in offshore wind: Simultaneously, players in incumbent industries are looking for growth in new markets. This is particularly true for oil and gas players struggling to reconcile long-term uncertainty on conventional exploration activity and the economic transition into more carbon-efficient and sustainable business models.Political ambition in Norway to leverage synergies and create new growth in renewable energy is prominent. These coinciding drivers together create an appealing opportunity in offshore wind for Norwegian firms spanning a vast range of sectors and value chain segments.

Project development by Norwegian developers could facilitate access to the global market for Norwegian supply-chain players: First contracts are crucial for a foothold in offshore wind. But Norwegian suppliers wishing to position in the market may struggle to obtain important first deals due to the current lack of a home market. Although not a condition for foothold, existing supply relations with Norwegian developers of offshore wind projects globally may facilitate access to the market for these players. Equinor remains the most prominent Norwegian offshore wind developer with ownership of a pipeline of more than 12 GW of projects worldwide. Projects developed by lower-tier Norwegian developers such as Fred. Olsen Renewables and Aker’s development arm Aker Offshore Wind remain mostly in early stages of development but could become instrumental for Norwegian sub-suppliers depending on how these mature going forward. In addition, there are several Norwegian companies going into project developments that have still not announced their ambitions.

Cost, competition, and innovation are key challenges to strong Norwegian presence: Previous efforts to capture, maintain and expand market shares in offshore wind roughly reflect historical capacity build-out patterns. Thus, leading current suppliers of products and services to offshore wind are largely concentrated to countries in North-western Europe and China, with only select exceptions in the more nascent North American market. Given the expected growth of the market in the next decades, Norway and other similarly industrialized economies are positioning for growth in offshore wind. The success of Norwegian firms in this increasingly global market will hinge on some key factors, including cost, competition and R&D.

Emergence of isolated supply chains could represent barriers for growth outside Europe: Leading offshore wind project developers and key supply chain players are seeking presence across regional markets in an increasingly globalised market for offshore wind. But isolated supply chains for offshore wind already exist to a full extent in China which, despite its role as key global market for new annual additions, remains largely off-limits to overseas players looking for a position.

Drivers behind such supply chain isolation are manifold and include factors such as geographical, cultural and operational proximity, cost, standards on quality/health/safety, and protectionism, whether explicit or not. Other similar regional supply chains could develop as the market for offshore wind continues to mature and increase in size. Global offshore wind players need to navigate this type of regionalization to defend market shares, should they emerge.

Development of a home-market likely to accelerate strategies of Norwegian offshore wind players in the international market: For Norway to position itself as an international supplier of offshore wind technology, it is valuable to establish a home arena in which supplier can commercialize technology, expand competence and reduce costs. Comparative advantages in topology, competence and innovation ability in marine and offshore industries make Norway particularly promising for floating offshore wind technology for which national hubs are yet to be fully established.

Conclusion

The offshore wind industry has the potential to be one of Norway’s most important industries in the future. Turnover for the Norwegian offshore wind supply chain in the Medium Base Case scenario is forecast to be 2.1 bn. EUR/year in the near term to 2025, increasing to 7.2 bn. EUR/year towards the end of the 2040s. 

Bottom-fixed offshore wind will remain the key source of revenue for Norwegian players, accounting for on average EUR 3 bn. in the 5-year period from 2026 to 2030 and EUR 5.3 bn. in the 2040s. Similarly, floating offshore wind makes up a mean of slightly below 800 MEUR/year in the 2026-2030 period and increases to an average of almost 2 bn. EUR in the decade leading up to 2050.

There is a significant upside in the Accelerated Growth scenario, where Norwegian supply chain could capture up to 12.9 bn EUR/year by the end of the forecast period at the High (P70) end of the market range, 9 bn. EUR/year of which would be bottom-fixed developments. On the other hand, in the Slow Progression scenario, total Norwegian turnover is limited to 2.8 bn. EUR/year in the same period at the Low (P30) end of the market range.

The majority of turnover will be from the European market, both for bottom-fixed and floating offshore wind. This region makes up for a mean revenue of 2.7 bn. EUR/year around 2030 and 3.7 bn. EUR/year in the 2040s or 72% and 51% of global opportunities for the Norwegian supply chain.

Opportunities for Norwegian companies are particularly strong within installation of both turbines and floating foundations, project development and management, HVDC export cables and offshore sub- stations, array cables, as well as marine operations, mooring systems for floating wind farms and within operation and maintenance of offshore wind farms. For the European market, the Norwegian supply chain can take a market share of up to 48% and above in the high market range in the Accelerated Growth scenario.

The full report can be accessed here