Is Hywind Tampen’s State Aid Approval a Kickstart for the Norwegian Offshore Wind Industry?

Abstract

On 11 March 2020, the EFTA Surveillance Authority (ESA) declared Norway’s measure to support the development of the world’s first medium-sized floating offshore wind turbine, Hywind Tampen, compatible with the European Economic Area (EEA) Agreement. The measure consists of an investment grant of NOK 2,3 billion (equivalent to ca. €205 million) for the construction of this offshore wind farm, covering about 43% of the total costs of the project. The project seeks to reduce Norway’s carbon footprint and help it transition towards a more sustainable energy supply.

This ESA Decision is one of many firsts. It constitutes the first approval of State aid for offshore wind projects in the EEA, in contrast to the EU in which projects have received State aid in France, Denmark and Germany, for example. Unlike those cases, in Hywind Tampen support is granted directly to the infrastructure – in the form of investment aid – and not for the subsequent generation and sale of electricity into the system – as operating aid. Hywind Tampen is also ESA’s largest decision, in terms of the amount of aid approved for a single project. Not only is it the world’s first medium-sized floating offshore wind farm, Hywind Tampen is also the first offshore wind farm to power oil and gas turbines, reducing the gas emissions from the extraction of fossil fuels.

Keywords: renewable energy support; investment and operating aid; offshore wind; EEA Agreement

JEL Classification: K23