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1、Norways 300 GW offshore wind opportunityAugust 2023 By Robert Hjorth,Anne Marthine Rustad,Klara Rbu,Sverre Lindseth,and Jens GjerrildBoston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pi

2、oneer in business strategy when it was founded in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams br

3、ing deep industry and functional expertise and a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm an

4、d throughout all levels of the client organization,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.Contents00 Letter from the authors04 This will be the largest industrial shift since the 1970s01 Europe needs all the wind power it can get05 Floatin

5、g wind in Norway will be competitive by 204002 Norway is uniquely positioned for offshore wind06 Becoming a leader in floating wind requires action now03 The government should set a stretch target of 300 GW07 BCGs Nordic offshore wind teamBOSTON CONSULTING GROUP 5We are witnessing climate records at

6、 an unprecedented pace.Even if 2023 is an outlier,it only confirms the alarm-ing trend of human-induced global warming and under-scores the urgency to phase out fossil fuels.The world needs enormous amounts of renewable energy,and a large share of that needs to come from offshore wind.At the same ti

7、me,the offshore wind industry is entering its first crisis.Costs are soaring,attempts are being made to renegotiate contracts,and projects are canceled.Critics have wind in their sails,and within the public debate there is a negative sentiment around the viability and cost of offshore wind developme

8、nt.Amid all this,Norway has started its offshore wind journey.It was a late start,and timing might seem unfortunate,but the industry is mobilized and energized.In this report,we bring forward six key messages,each detailed in separate chapters:1 Europe needs all the wind power it can get.Most of thi

9、s needs to come from floating offshore wind in areas beyond current development hotspots.2 Norway is uniquely positioned for offshore wind.There is potential to supply Europe with large amounts of secure,affordable,and clean energy,as well as to export pioneering floating wind solutions and technolo

10、gy.3 The government should set a stretch target of 300 GW.Europe needs the energy.It will be good business for Norway,and it will make the first 30 GW cheaper.4 This will be the largest industrial shift since the 1970s.New supply chains,a high-capacity offshore grid,and floating wind factories along

11、 the coast are needed to deliver on the ambition.5 Floating wind in Norway will be competitive by 2040.Double-digit learning rates will lead to a level-ized cost of energy of less than 45/MWh by 2040 for floating wind.Projects awarded at the end of this decade will be subsidy-free and profitable for

12、 develop-ers,and the industry development will have a positive NPV of 600 billion NOK for the Norwegian state.6 Becoming a leader in floating offshore wind requires action now.The socioeconomic upside is significant,providing 150,000 jobs,870 billion NOK annual energy export revenue generated,and 40

13、0 million tons of annual CO2 equivalents abated.Howev-er,there is no time to lose,and both the government and the industry must act now.Norway is facing a unique opportunity that could equal the oil and gas industry development that started half a centu-ry ago.Not only can Norway meet its own climat

14、e target and support Europe in achieving theirs,but it can also continue its role as a vital partner for Europe,providing secure,affordable,and clean energy(electricity and green molecules).Income and jobs can be secured for future generations,particularly in coastal communities.With appropriate mec

15、hanisms,the power price can be stabilized at a consistently lower level,benefitting consumers and new industries alike.All of this can happen while maintain-ing minimal impact to nature.This should be a winning formula for politicians from any party,but it takes courage and requires swift action.If

16、we wait,other countries will take the lead and leave the Nor-wegian supply chain behind.Our call to decision-makers is to be bold and act fast.Prioritize long-term climate,nature,and economic benefits over short-term public opinion.Norway is at the doorstep of a unique opportunity.We have one chance

17、lets take it.Anne Marthine Rustad PrincipalSverre Lindseth PartnerRobert Hjorth Managing Director&PartnerKlara Rbu Project LeaderJens Gjerrild Project LeaderLetter from the authorsBOSTON CONSULTING GROUP 7NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYLarge-scale renewables can meet Europes energy needsIn

18、2019,the European Commission set a bold decarboniza-tion target:net zero by 2050 and a 55%emission cut by 2030 compared to 1990 levels.However,projections indi-cate only a 60%reduction by 2050 at the current pace.To achieve these targets,Europes energy mix must fundamentally change from mainly fossi

19、l fuels today to primarily renewable energy in 2050(see Exhibit 1).Electrification of transport,heating,and indus-try,together with hydrogen production,will be the key drivers of emission reductions,and lead to in-creased demand for green electricity production.Russias invasion of Ukraine and the No

20、rd Stream attacks have demonstrated how vulnerable our energy system is.Energy security is top of mind for politicians,and the addi-tional renewable generation capacity must be built in Europe.With the right approach and scale,the renewable expansion can solve Europes energy trilemma and ensure secu

21、re,affordable,and clean energy for the future.Winds pivotal role in the energy transitionSeveral sources of renewable energy are needed to enable the decarbonization of Europe.Wind and solar will be the most important technologies,with a tenfold increase in installed capacity in 2050 compared to cur

22、rent levels.1|Europe needs all the wind power it can getWind power will likely constitute around half of the in-stalled capacity,translating to 2,000 GW to reach the net zero commitment.This estimate is in line with that of WindEurope with a somewhat higher projection for green hydrogen production.T

23、oday,Europe has 225 GW installed capacity of onshore wind and 30 GW of offshore wind.Under the current policy,an additional 400 GW of wind power is expected to be installed by 2050.Nine North Sea countries are taking the lead by committing to a combined total offshore wind capacity of 120 GW by 2030

24、 and 300 GW by 2050 through the Ostend Declaration.However,there is still a substantial gap of 1,350 GW to be closed,most of which must be filled by offshore wind given acreage limitations and public resistance to onshore wind and solar.Europe needs to look to countries and sea areas with the necess

25、ary condi-tions,space,energy infrastructure,and know-how to develop and house the additional 1,350 GW.Potential areas for offshore wind can be found in many sea areas in Europe.Of these,the Norwegian coastal areas in the North Sea,Norwegian Sea,and Barents Sea have extraordinary properties,such as l

26、arge available areas with suitable water depths and abundant wind resources.These areas have great potential for floating offshore wind.Source:BloombergNEF;Enerdata Global Energy&CO2 database;BCG analysis Exhibit 1|2,000 GW wind capacity is needed by 2050 to satisfy Europes net zero commitment with

27、a 1,350 GW installation gapSolarWindOther renewablesBioenergyNuclearOilGasCoalNeededInstalledProjectedGapPrimary energy mix to reach net zero by 2050(TWh)Wind power capacity needed to reach net zero by 2050(GW)2050ProjectedGap2,0006502504001,3502020205020,00015,000-25%NORWAYS 300 GW OFFSHORE WIND OP

28、PORTUNITYBOSTON CONSULTING GROUP 9BOSTON CONSULTING GROUP 9Norway is well positioned to take the lead in large-scale offshore wind,with exceptional wind resources,a strong supplier network,ample capital,and ability to mitigate potential downsides.The best wind resources and abundant suitable areas f

29、or windOne of the worlds best wind resources:The Norwegian coast-al areas rank among the worlds finest locations for float-ing offshore wind.First,the wind blows often and strongly.Second,the vast geographical area allows for significant spacing between wind turbines and between wind farms,minimizin

30、g negative wake effects.The resulting capacity factors of 5060%make a compelling business case,as the cost per MWh produced is low.Third,winds in the north are largely uncorrelated with those in continental Europe,making the production more valuable since it can meet European demand when the wind do

31、es not blow on the continent.Abundant space for wind:Norway has one of the longest coastlines in the world,and the Norwegian economic zone and territorial waters sprawl across more than 850,000 square kilometers(excluding areas related to Svalbard and Jan Mayen).The Norwegian Water Resources and Ene

32、rgy Directorate(NVE)has identified low-conflict areas with the potential to host between 200 and 400 GW of offshore wind along the Norwegian coast(see Exhibit 2).The sug-gested areas occupy merely 6%of the Norwegian waters,leaving 94%untouched.Thus,it is possible to facilitate harmonic co-existence

33、with fisheries,maritime traffic,and other affected stakeholders while ensuring that nature and the environment are properly safeguarded.This is aligned with Multiconsults estimate of up to 338 GW offshore wind potential in low-conflict areas.2|Norway is uniquely positioned for offshore windThe fjord

34、s are ideally suited for floating wind factories:Deep-water quays in calm waters are needed to manufac-ture floating foundations.Once assembled,they need storage until suitable weather permits offshore towing and installation.Norwegian fjords are uniquely suited to meet these needs,offering both dee

35、p-water quays and ample storage.In addition,local availability of limestone for con-crete foundations reduces the environmental footprint and transportation cost.A well-established supplier industry to scale offshore windSupplier industry:Norway has access to offshore expertise from the oil and gas

36、industry that can be leveraged across the entire process,from planning to building and operating offshore wind facilities.This includes manufacturing float-ing foundations,supplying installation vessels and installa-tion capabilities,developing mooring systems,and offering maintenance and services i

37、n harsh offshore environments.Facilities,workforce,and innovation:Norways existing ship-yards,oil and gas yards and facilities,and coastal infra-structure can be repurposed to accommodate the offshore wind factories needed to scale the industry.The workforce has extensive experience in offshore envi

38、ronments,and Norway is home to world-leading maritime research com-munities with robust industry ties.Access to capital to jump-start the industryInitial investment capital:The Norwegian governments significant financial power can be leveraged to establish the offshore wind industry.Subsidies and ef

39、fective policies are needed to incentivize development of the local supply chain and attract international competence and capital to invest heavily in Norway.The task is to invest enough to ensure that Norway takes a world-leading position in float-ing offshore wind,yet not so much that Norway finan

40、ces the entire cost reduction on behalf of the global industry.Proven model for infrastructure:The state-owned gas infra-structure operator in Norway,Gassco,is a well-proven model for infrastructure that could be applied to offshore wind as well.A state-owned operator or coordinator of the offshore

41、transmission grid can distribute the infrastructure cost across a wide number of projects to ensure equitable and fair access for all developers.It can more efficiently monitor and safeguard the cables.It will reduce project risk for developers will lower the cost of project development.Norway can m

42、anage and mitigate potential downsides of offshore windTo mitigate and manage environmental impacts,Norway should follow strict environmental standards for offshore wind manufacturing and installation.This will not only minimize direct local impact on marine ecosystems but also stimulate innovation

43、and environmental solutions with potential global applications.Floating wind is less invasive than traditional bottom-fixed offshore wind developments.It avoids intrusive seabed piling,can give marine life shelter and improve habitats,and simplifies the decommissioning process.Exhibit 2|300 GW of of

44、fshore wind possible in the areas suggested by the Norwegian Water Resources and Energy Directorate(NVE)Source:Norwegian Water Resources and Energy Directorate(NVE)New industry:A firm commitment to the offshore wind industry will catalyze investments in Norways offshore wind value chain and nurture

45、the emergence of locally developed technologies with the potential for export.Me-non Economics projects that 40 GW of floating wind could generate 50,000 new direct and indirect jobs in Norway by 2050.On this basis,we estimate that a 300 GW ambition could provide 150,000 jobs when factoring in antic

46、ipated efficiency improvements.This represents 75%of the work-force employed in Norways oil and gas sector as of 2022 and would therefore be more than enough to employ the oil and gas professionals who will need new jobs in the coming decades.Export revenues:Annual export revenues are projected to r

47、each 870 billion NOK with 300 GW in operation.This figure is conservative,considering only the direct revenue from energy export.A local offshore wind industry will also lead to significant export of technology and capabilities to the rest of the world.Floating offshore wind is still a na-scent indu

48、stry,and Norway can take a leading role in devel-oping the technology and solutions needed.Energy partner for Europe:In 2021,Europe imported 55%of its consumed energy according to Eurostat.By 2050,Eu-ropes need for renewable energy is expected to soar to 10 times todays demand.The energy export from

49、 300 GW of offshore wind is similar in terms of energy amount to the anticipated reduction in oil and gas export from Norway by 2050.By amplifying its offshore wind efforts,Norway can remain one of Europes key energy providers and solve Europes energy trilemma by providing secure,affordable,and clea

50、n energy.While we view 300 GW as an optimal target for Norway,both in terms of supply chain capacity and sea area avail-ability,noteworthy benefits can still be realized at lower levels,such as 200 GW.Subsidies are needed for the first projectsAn investment of 115 billion NOK in subsidies will be ne

51、eded to make the first floating wind projects profitable for developers.The subsidies are not a financial hindrance for Norway,as they correspond to only 0.3%of Norways national budget each year that subsidies are paid out.Moreover,the subsidy requirement could be reduced by mandating(and at the sam

52、e time incentivizing through effective policies)the oil and gas operators to decarbonize operations with power produced by offshore wind.The recent decision to approve electrification of the Melkya LNG plant highlights a missed opportunity for promoting offshore wind.The region needs additional powe

53、r,and several developers have announced plans for offshore wind to electrify Melkya.Mandating offshore wind to provide the additional power could have kick-started the offshore wind industry in the north.By the end of this decade,developers are expected to see profitable business cases,eliminating t

54、he need for further subsidies.And as the industry evolves and costs are re-duced,developers will likely be willing to pay concession fees for sites rather than seek subsidies.The first 30 GW of offshore wind are needed in Norway to meet the domestic demand for electricity.In a 30-GW scenario(the gov

55、ernments current target),the subsidy need will be substantially higher than in a scenario where 300 GW is the target.This is because 30 GW will not pro-vide the necessary scale,learning,or standardization to significantly reduce the levelized cost of energy(LCOE)of Norwegian floating wind.NORWAYS 30

56、0 GW OFFSHORE WIND OPPORTUNITY300 GW should be Norways stretch targetEurope requires an additional 1,350 GW of wind power to reach net zero by 2050.Given Norways prime positioning for floating offshore wind,we believe Norway should set a stretch target of 300 GW by 2050,with clear interim targets fo

57、r 2030 and 2040.The rationale behind a stretch target of 300 GW has sever-al main components.NVE and Multiconsult have indicated that there is space for approximately 300 GW in low-con-flict areas.Genuine commitment to offshore wind in Nor-way will help alleviate the current supply chain crisis.A su

58、bstantially higher target than 30 GW is necessary to establish a new industry with a local value chain.An ambi-tious buildout of 300 GW will bring large social and eco-nomic benefits to Norway.And finally,replacing oil and gas with electrical power and derivative molecules from off-shore wind will e

59、nsure that Norway can remain one of Europes key energy partners.Supply chain investments:A binding target and transparent roadmap for building substantially more offshore wind in Norway will help alleviate the supply crisis.Developers who are currently reevaluating their presence in Norway will comm

60、it fully to building a position and investing in the local supply chain.Suppliers who are currently struggling will be able to convince their owners to commit capital to investing in production facilities that can reduce bottle-necks.3|The government should set a stretch target of 300 GWBOSTON CONSU

61、LTING GROUP 11BOSTON CONSULTING GROUP 13NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYThe largest industrial shift since the 1970sScaling the floating offshore wind industry and reaching 300 GW of installed capacity by 2050 will undeniably be an ambitious industry endeavor.To achieve this,we need to insta

62、ll an ambitious 1517 GW of capacity annually from 2040 onward.This translates to producing 1520 founda-tions every week throughout the year and installing 3540 turbines each week during suitable weather windows(see Exhibit 3).The manufacturing and installation will involve thousands of skilled worke

63、rs.While it is a daunting task,Norway can take comfort in knowing it has done it before.Despite initial inexperience in offshore oil and gas development,Norway leveraged its robust maritime heritage in the 1970s to successfully build its own oil and gas industry.The industry developed at a rapid pac

64、e,with annual production scaling by more than five times between 1975 and 1980 and twenty times over the 25-year period from 1975 to 2000 according to the Norwegian Petroleum Directorate.Now is the time to invest in a similar industrial shift.With the experience and infrastructure in place,Norway is

65、 even better positioned for success now than during the onset of the oil and gas industry in the 1970s.4|This will be the largest industrial shift since the 1970sSource:BCG analysisExhibit 3|Reaching 300 GW offshore wind by 2050 requires an efficient factory capable of producing 800 turbines per yea

66、r800 turbines installed every year35-40 turbines installed every week in season60-80 vessels in operation for installation10-15 production sites with capacity of 50-80 foundations p.a.Annual installation(GW)3002001000Cumulative(GW)20151050Annual installation Floating(GW)Annual installation Bottom-fi

67、xed(GW)Cumulative(GW)304050Assembly-line offshore wind factoriesOffshore wind is a business where mass-produced,stan-dardized turbines and foundations are core to success.Similar to the auto industrys efficient assembly-line pro-duction,offshore wind can benefit from an approach that achieves the ne

68、cessary manufacturing pace and cost re-ductions.Norways geography is ideal to drive this transfor-mative shift by establishing the first offshore wind factories in its fjords.An offshore wind factory takes an assembly-line approach spanning from foundation construction to turbine assem-bly(see Exhib

69、it 4).By parallelization,streamlining,and allocating specialists to specific tasks at each station,the assembly-line approach significantly enhances efficiency and accelerates the learning curve.Foundations:1015 foundation manufacturing sites are required to produce an average of 1520 foundations pe

70、r week in 2040.Whether made from steel or concrete,the foundations are equivalent in size to multi-story buildings and require deep-water quays in calm waters for construc-tion.The foundation components are put together or cast first on land,then quayside.Local sources of limestone for concrete foun

71、dations can reduce the environmental im-pact and cost of transportation.Turbines:There are no wind turbine factories in Norway today.However,with an annual demand of 800 turbines from 2040 onward,there is a compelling case for turbine manufacturers to establish local turbine factories.Local producti

72、on will reduce transportation challenges for large components and the carbon footprint,while also increas-ing the resilience of the supply chain.To keep costs down and learning rates high,the turbines should,to the extent possible,be standardized in terms of type and size across projects.Assembly pr

73、ocess:Foundations progress through the factory for installation of the tower,nacelle,and blades,avoiding the need for expensive heavy-lifting at sea needed for bottom-fixed wind.Assembled turbines require storage until the weather permits offshore towing and installa-tionalso here,the fjords natural

74、ly offer the temporary deep-water storage space needed.Offshore installation:Installation will involve the operation of 6080 vessels(tugboats,anchor handlers,subsea sup-port vessels,cable layers,etc.).During suitable weather windows,vessels will operate all day long to lay cables,install mooring,con

75、nect the turbines and electrical cables,etc.Repurposing of existing vessels and leveraging the strong maritime experience as well as Norwegian innova-tions in low-carbon shipping are key in this part of the value chain.NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYFit-for-purpose off-and onshore grids and

76、 alternative offtake300 GW of offshore wind represents a tenfold increase in Norways electricity generation.This will require extensive investments in the grid infrastructure onshore and off-shore.Multiple new export cables are needed and the transmission system onshore needs to be strengthened sign

77、ificantly.Building and operating the offshore grid is a massive un-dertaking.To ensure optimization for the entire Norwegian offshore wind portfolio and Norway as a whole,the Norwe-gian offshore grid could be developed,owned,and operat-ed by the state through a similar vehicle to Gassco.Furthermore,

78、alternative offtake and export routes are needed.Hydrogen and ammonia will be important energy carriers in the future,and production of these can serve as alternative offtakes to grid exportfor example,in times of low electricity demand or for direct industrial purposes.A regulatory framework for pr

79、oduction and export of these carriers needs to be established and considered when designing the off-and onshore grid.Risks related to offshore wind and how to mitigateAs a front-runner,Norway should ensure collaboration and knowledge sharing to avoid bearing the cost of technology development alone.

80、Norway must also be aware of the inherent risks and uncertainties related to building a new industry:Regulatory ambiguity:Vague directives,slow processes,and unpredictable regulatory and tax policies will lead to delays and reduce investment appetite.Recent events,such as the postponed application d

81、eadlines for Utsira Nord and Srlige Nordsj II,the absence of Contract for Difference regulations in the same auctions,and the sudden imposi-tion of a resource rent tax with retroactive effects on on-shore wind are good examples of what should be avoided.The first auction round will help build offsho

82、re wind experi-ence among the authorities,and we expect improvements in this area going forward.Low power prices:Power price predictions carry inherent uncertainty.There are diverging views in the industry cur-rently,with some believing in abundant power production and lower prices and others seeing

83、 a pan-European scarci-ty of green power and consistently higher prices as a result.Emerging technologies with significantly lower LCOE may lead to substantially lower power prices.Developers need to mitigate the power price risk in their business cases,looking for opportunities to secure offtake an

84、d increase value of the power through such levers as trading and downstream integration.Supply chain squeeze:The offshore wind industry is current-ly facing its first crisis.Supply chains are severely chal-lenged,as reflected by current cost increases,project de-lays and cancellations,contract reneg

85、otiations,and industry exits.There will be significant bottlenecks in the coming years,especially for turbines,foundations,installa-tion vessels,and skilled labor.Suppliers are advocating for a more equitable distribution of margins,potentially lead-ing to long-term elevated cost levels.Developers m

86、ust prepare for more open-book collaboration with the supply chain and be prepared to invest in suppliers to distribute margins more fairly.Insufficient absorption capacity:Delivering power(and derivates)to Europe from 300 GW of offshore wind will require major investments in grid infrastructure and

87、 pow-er-to-X facilities.Norway is dependent on other nations to invest in their infrastructure to avoid stranded power.Continued collaboration at the state level will be required and a firm commitment to the stretch target will help create the environment for collaboration.Exhibit 4|The assembly-lin

88、e floating wind factory increases speed and lowers cost of offshore windBOSTON CONSULTING GROUP 15BOSTON CONSULTING GROUP 17NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYFloating wind will match the cost of bottom-fixed by 2040From 2011 to 2021,the LCOE for bottom-fixed offshore wind saw a remarkable decl

89、ine,going from 170/MWh to 70/MWh(International Renewable Energy Agency).In fact,since the 2000s,for each time the installed capacity of offshore wind has doubled,there has been a 30%reduction in cost.This learning rate has exceeded even the most optimistic analyst projections,and offshore wind has t

90、ran-sitioned from being subsidy-dependent to generating substantial revenue to European governments in just the span of a decade.Floating wind is a far less mature industry,with only 200 MW installed capacity worldwide compared to 60 GW for bottom-fixed offshore wind.It will not experience the same

91、learning rate as bottom-fixed since a significant share of LCOE improvements has come from increasing turbine sizes which will also benefit floating wind.That said,we expect double-digit learning rates for floating wind too.We project that LCOE will drop from above 120/MWh in 2023,to less than 45/MW

92、h by 2040(see Exhibit 5).Our analysis is based on the following comparison of the two technologies.Starting with the external differences,we see that floating wind has attractive attributes:5|Floating wind in Norway will be competitive by 2040Source:Wind Europe;Wood Mackenzie;BCG analysisExhibit 5|F

93、loating wind likely to be cost-competitive by 2040FloatingBottom-fixed15010050202520302035204020452050Year of COD0Cost increase due to current supply chain distressAnticipated LCOE development of large-scale floating wind versus bottom-fixed(/MWh)Better wind conditions:Floating wind can be built in

94、larger parts of the seas than bottom-fixed since it is not tethered to specific seabed conditions and has a higher maximum water depth.This flexibility unlocks access to prime sites with exceptional wind conditions,and mini-mal wake effects,culminating in higher average produc-tion.Larger scale:Fewe

95、r constraints on areas allow for larger wind farms.Multi-gigawatt wind farms enable further process standardization and efficiency in installation and operations and maintenance.Consequently,each project profits from amplified scale benefits.Lower environmental impact:Floating wind installations are

96、 usually situated farther offshore and utilize mooring that is less invasive than bottom-fixed structures.This minimizes the impact on local communities and marine ecosystems,likely leading to increased public support and reduced costs for environmental precautions.Looking next at the technical comp

97、onents,we see that floating wind could match the cost of bottom-fixed wind:Turbines:The turbines used in floating and bottom-fixed wind are largely similar,although towers for floating turbines are designed to withstand higher loads with slightly higher material cost as a result.Foundations:At prese

98、nt,floating foundations constitute 2030%of floating wind cost,compared to less than 10%for bottom-fixed designs.However,floating founda-tions have superior potential for standardization over bottom-fixed,which must be tailored to specific seabed conditions.In addition,floating foundations are simple

99、r and potentially less material-intensive,especially com-pared with deep-water bottom-fixed counterparts.Substation and cables:Floating wind requires dynamic cables that are more costly than the ones used for bottom-fixed.However,considerable effort is currently being put in to improve the design,an

100、d the cost gap will narrow.Substations in deeper waters are also current-ly more expensive,but floating technology(or subsea technology)from the oil and gas industry will lead to a narrowing cost gap here too.Similar to the turbine foun-dations,the substation foundations can be standardized and less

101、 material-intensive compared to deep-water bottom-fixed counterparts.In addition,the substations can benefit from larger scale in floating wind by linking multiple parks to a few substations.Mooring:Although mooring presents an additional expense for floating wind compared to bottom-fixed,it is proj

102、ected that costs will decline considerably with increased standardization and scale.Finally,comparing the processes for installation and opera-tions and maintenance,floating wind has clear advantages compared to bottom-fixed:Simpler installation process:Floating wind turbines can be entirely pre-ass

103、embled at the quayside,then towed and connected to pre-installed mooring systems at the wind farm.This eliminates the need for expensive specialized vessels required for the installation of bot-tom-fixed offshore wind.Simpler large-part maintenance:Maintenance and repair of large spare parts for flo

104、ating offshore wind can likely be done by towing entire turbines to the shore,avoiding the need for costly specialized vessels.Levelized cost of energy(LCOE)is a measure for comparing the cost of energy from different sources.It is the average net present cost per unit of energy produced over the ge

105、nerators lifetime.NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYLCOE projections prove that floating wind will be profitableBased on the advantages laid out above,floating wind can achieve similar or even superior learning rates compared to the 30%rate seen for bottom-fixed wind.The only excep-tion is the

106、 turbines,which will follow a similar learning rate as for bottom-fixed.If built out at sufficient scale,this means that floating offshore wind will reach cost parity with bottom-fixed by 2040.Our conservative projections suggest a floating wind LCOE below 45/MWh by 2040.This assumes an 11.5%CAPEX l

107、earning rate based on figures from the U.S.Department of Energys National Renewable Energy Laboratory(NREL)and a projected annual OPEX decrease from 50,000/MW in 2023 to 20,000/MW in 2040.We have applied a 7%discount rate,in line with NVEs standards.Even lower LCOE levels are achievable,and assuming

108、,for example,a CAPEX learning rate of 15%instead of 11.5%,results in an LCOE below 40/MWh by 2040.We have used forecasts of the European power prices from leading analyst firms.When combining these with our LCOE projection,we see that developers can anticipate new floating offshore wind farms to be

109、profitable by the mid-2030s(commissioning date).In other words,floating offshore wind projects will have positive business cases and no need for subsidies already by the license rounds at the end of this decade.We have also assessed the attractiveness of the industry build for the Norwegian state.We

110、 find a positive NPV to the state of 600 billion NOK when considering required subsidies and future taxes paid by developers.This as-sumes a perfect market design where developers achieve their required rate of return,and the state captures the remaining value.Such a value distribution can typically

111、 be achieved when developers compete for sites through mon-etary auctions.In practice,it can also be achieved through a combination of lease fees,company tax and other taxes.Our conclusion depends on a firm commitment to scale the floating offshore wind industry quickly(including secur-ing subsidies

112、 for the first projects)and on the power price development.However,we see a strong rationale for the Norwegian government to significantly increase the target for offshore wind in any scenario.Our sensitivity analysis(see Exhibit 6)indicates an attractive business case for the state across most powe

113、r prices and floating wind LCOE-de-velopments,with the value of future tax income exceeding required subsidies to developers.This conservative assess-ment only includes direct income to the state from devel-opers,not the secondary economic and social benefits resulting from building a new industry p

114、roviding 150,000 jobs.This means that even in scenarios where the stand-alone business case for offshore wind development is nega-tive for the state,there will be profound and lasting posi-tive ripple effects in society.Source:BCG analysisExhibit 6|The offshore wind business case is attractive to No

115、rwayNegative NPVPositive NPVLCOE floating wind 2040(/MWh)Captured power price(/MWh)40/MWh50/MWh40/MWh50/MWh60/MWh70/MWh60/MWhNPV to the state of subsidies and taxes from 300 GW offshore windIncluded in the calculations Taxes and fees collected from offshore wind developers Subsidies to developers re

116、quired to make floating wind competitiveNot included in the calculations Income tax from employees in the offshore wind industry Social and economic ripple effects in society as result of providing 150,000 jobs Tax revenues from companies in other parts of the value chain Tax revenue from export of

117、floating wind technology and solutionsBOSTON CONSULTING GROUP 19NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYBOSTON CONSULTING GROUP 21NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYThis is an opportunity Norway cannot afford to missNorways current target of 30 GW by 2040 is a good start and will be sufficient

118、to supply the power needed for de-cades to come.However,Norway is at the doorstep of a unique opportunity that can shape the future.Anything beyond 30 GW represents a chance to export power and technology.Achieving the stretch target of 300 GW will yield 870 billion NOK in annual export revenues,pro

119、vide 150,000 jobs,finance the welfare system for future genera-tions,abate 400 million tons of annual CO2 equivalents,and maintain Norway as one of the most important energy providers to Europe.With the governments current 30-GW target,Norway risks falling behind rather than taking the lead in offsh

120、ore wind.Large capital will be allocated elsewhere,value chains will be built elsewhere,and leading technology development will happen elsewhere.Once the country falls behind,catching up will likely become unattainable,as invest-ments are substantial and favor others.30 GW will create positive rippl

121、e effects in the supplier industry,but not nearly at the level they could have been at.Norway has a one-time opportunity to establish itself as the leading offshore wind nation and get a substantial socioeconomic upside.However,to achieve this goal,Nor-way must attract large capital and leading offs

122、hore wind competence and expertise.This can only be done if the decisions-makers dare to make bold commitments now.6|Becoming a leader in floating wind requires action nowSource:BCG analysisExhibit 7|300 GW of offshore wind shapes Norways future870 bnNOK export revenues p.aEquivalent to 90%ofNorways

123、 export revenuesfrom oil and gas in 2021150,000direct and indirect jobsEquivalent to 75%of direct and indirect jobs related to Norwegian oil and gas in 2022400 MtCO2 equivalentsavoided p.a.Equivalent to 11%of EUs CO2eemissions in 20221,500 TWhenergydelivered p.a.Equivalent to 60%of Norways oil and g

124、as primary energy production in 2022Actions for the government Commit to 300 GW now:Set a stretch target of 300 GW and create a transparent pipeline of auctions year by year to provide the industry with certainty to make sig-nificant investments.This will help address the current profit distribution

125、 and capacity bottleneck challenges in the supply chain too.Tender GW-sized areas instead of MW-sized areas to allow the necessary scale to enable profitable business cases for each wind farm.Provide sufficient subsidies:Ensure adequate subsidies are available for initial floating wind projects.Awar

126、d the subsidies transparently as two-sided Contracts for Difference to minimize risk for developers and build in mechanisms to ensure that operators are incentivized to optimize production toward what serves the power market best.Develop the grid and offtake:Establish a state-owned entity to develop

127、,own,and operate the offshore grid,including multiple new export cables.Provide sufficient funding and mandate to Statnett to upgrade the onshore grid.Coordinate with European transmission system operators to build a North Sea grid,including energy islands and power-to-X facilities.Ensure regulatory

128、 clarity:Establish and maintain trans-parent and stable regulations and safety standards to minimize uncertainties for developers and suppliers.Accelerate the approval and permitting process.Encourage collaboration with industry and academia:Set up a dialogue between industry and government to ensur

129、e sufficient governmental support for the sector.Involve academia to conduct studies and research,and fund higher education programs in offshore wind.Actions for businesses Collaborate within the supply chain:Establish clusters and share knowledge and learnings with other players in the value chain

130、to collaboratively advance the industry.Ensure fair and equitable distribution of profits in the supply chain and collaborate to resolve and avoid bottle-necks.Commit capital:Invest early to catalyze rapid industry development,and anticipate that investments by others will reinforce the profitabilit

131、y of initial investments.Con-sider investments at a portfolio level rather than making individual project decisions,and take confidence in the governments firm commitment to a large home market in Norway.Upgrade infrastructure:Ensure yards and other infra-structure are fit for the purpose within the

132、 floating wind industrys component and service needs.Build vessels that meet the needs for floating wind,and not only installation vessels capable of heavy lifts.Capability building:Invest in building internal expertise and contribute to competence development of the sup-plier industry.Sponsor resea

133、rch and trainee positions in academia and work with local communities to develop blue-and white-collar talent for the offshore wind indus-try.Invest in R&D:Allocate resources to research and development efforts for offshore wind technology to accelerate cost reductions and develop technology and sol

134、utions that can be exported.Work with the oil and gas suppliers to prepare them for using their capabilities in offshore wind.Leverage the flourishing startup commu-nity in Norway to develop new companies.Our call to decision-makers is to be bold and act fast.Prioritize long-term climate,nature,and

135、economic benefits over short-term public opinion.Norway is at the doorstep of a unique opportunity.We have one chancelets take it.NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYBOSTON CONSULTING GROUP 23BOSTON CONSULTING GROUP 23About the authorsRobert Hjorth is a Managing Director and Partner in the Oslo

136、office and leads BCGs global offshore wind team in the Nordics.He has 10 years of experience in the renew-ables sector and works with offshore wind clients globally.You may contact him at .Klara Rbu is a Project Leader in the Oslo office and a core member of BCGs climate and sustainability practice

137、area where she focuses on renewable energy and offshore wind.You may contact her at .Jens Gjerrild is a Project Leader in the Copenhagen office.He has extensive experience from the offshore wind indus-try and is now serving clients globally in an expert capacity.You may contact him at .Anne Marthine

138、 Rustad is a Principal in the Oslo office and is a core member of BCGs energy practice area,with a focus on energy transition,renewable energy,and off-shore wind.You may contact her at .Sverre Lindseth is a Partner in the Oslo office focusing on supporting integrated energy companies through the ene

139、rgy transition.You may contact him at .NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYBCG is a global consulting firm and leading strategy advis-er.We partner with leaders in business and society,collab-orating closely to solve the most important challenges and capture the best opportunities.In the Nordics

140、,we have built an offshore wind hub with dedicated consultants and analysts,including offshore wind professionals with backgrounds from Equinor,rsted,RWE,Siemens Gamesa,and similar companies.Our local offshore wind team is supported by BCGs global network of experts,enabling us to combine global exp

141、ertise with local market intelligence and understanding.Our Nordic offshore wind team serves clients across the offshore wind value chain,including developers,suppliers,transmission system operators,regulators,and investors.We bring our local expertise abroad and deliver global expertise to the Nord

142、ics to drive client impact.Over the past few years,the Nordic offshore wind team has done close to 100 projects with companies in the offshore wind industry across the Nordics,Europe,North America,and Asia.Our team is at the forefront of developing BCGs global intellectual property in offshore wind,

143、and we are actively sharing insights back with the industry.We are curious individuals and always looking for a good intellectual chal-lenge and debate.Please do not hesitate to reach out to set up a discussion with us.7|BCGs Nordic offshore wind teamNORWAYS 300 GW OFFSHORE WIND OPPORTUNITYBOSTON CO

144、NSULTING GROUP 25Related BCG publicationsOffshore Wind:Future of LogisticsOffshore wind is growing,with each part of the supply chain maturing quickly.This study presents findings from a comprehensive survey BCG ran on logistics in the industry.Solutions across installation and operations were com-p

145、ared based on customer expectations,industry pain points and preferences.Mastering Scale in RenewablesThe importance of scale is key in offshore wind and other renewable energy sources.In this article,BCG assesses the impact of scale on value creation and the most important levers that can be pulled

146、 to leverage scale benefits.Nordic Net Zero:The Green Business OpportunityThe Nordic countries all have ambitious climate targets,but struggle to meet them.Offshore wind and other renew-ables is fundamental to reach the targets.In this report,BCG identifies a feasible and affordable path to net zero

147、 emissions for each of the Nordic countries.Norways Competitiveness in the Energy TransitionThe energy transition is here,but which countries have what it takes?In this joint article,BCG and NHO presents a quantitative ranking of selected countries competitive positions in the energy transition.Supp

148、ly Chain Resilience in Wind and Solar EnergySupply chains in offshore wind and the remaining renew-able energy industry is under pressure,with resilience being top-of-mind for executives.In this article,BCGs leading experts look at solutions for supply chain and procurement challenges for renewable

149、players.Low-Carbon Hydrogen is a High-Stakes Investment OpportunityThe low-carbon market is still nascent,but expected to provide critical decarbonization in industries such as avia-tion and steel.Offshore wind and other renewables will be a key enabler.BCG has identified the actions stakeholders ac

150、ross the ecosystem can take to unlock the market.NORWAYS 300 GW OFFSHORE WIND OPPORTUNITYAdd Co-Sponsor logo here Acknowledgements The authors thank Lars Habostad,Andreas Svela,Ingunn Haldorsen,Mikkel Pedersen,Emil Smilden,and Jenny Mathiesen for their contributions to research and analysis.In addit

151、ion,the authors want to acknowledge Anders Porsborg-Smith,Odd Arne Sjtil,Brge Kristoffersen,Frank Klose,Ernesto Wandeler,and Sven Kossack for valuable contributions and input in developing this report.Finally,the authors are grateful to Sophia Kenvold for assistance in preparing this report,and BCGs

152、 Design Studios and Media team for their contributions to editing,design,and production.Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities.BCG was the pioneer in business strategy when it was founde

153、d in 1963.Today,we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholdersempowering organizations to grow,build sustainable competitive advantage,and drive positive societal impact.Our diverse,global teams bring deep industry and functional expertise an

154、d a range of perspectives that question the status quo and spark change.BCG delivers solutions through leading-edge management consulting,technology and design,and corporate and digital ventures.We work in a uniquely collaborative model across the firm and throughout all levels of the client organiz

155、ation,fueled by the goal of helping our clients thrive and enabling them to make the world a better place.For Further Contact If you would like to discuss this report,please contact the authors.For information or permission to reprint,please contact BCG at .To find the latest BCG con-tent and register to receive e-alerts on this topic or others,please visit .Follow Boston Consulting Group on Facebook and Twitter.Boston Consulting Group 2023.All rights reserved.8/23 28 PUBLICATION TITLE