“My guess is that non-financial elements impacted the Sørlige Nordsjø II auction. The numbers just don’t add up,” says Kurt Ove Østrem, Partner Deal Advisory at KPMG Norway.
He spoke at the GCE NODE Top Leader Forum in Kristiansand Thursday evening.
Østrem says IKEA’s ambitions for energy production is likely to have played a role, pushing Parkwind and the Ventyr consortium to enter the lowest bid. IKEA is determined to produce more energy than it consumes. And speculations are that the Swedish home furnisher is willing to pay more than market price to make it happen.
KPMG’s own calculations indicate that the best-case financial scenario for Sørlige Nordsjø II is close to break even. In other scenarios, Ventyr stands to lose billions during the lifetime of the wind farm.
“We were surprised to see bidding at all for the Sørlige Nordsjø II project, since it is very hard to make money in offshore wind right now. The industry is currently in a three-way squeeze with higher interest rates, supply chain inflation, and the expectation that power prices will drop in years to come,” says Østrem.
Returning to the idea that Ventyr included non-financial elements in their bid process, Østrem emphasizes that he is not certain of this.
“Ventyr could have a better feel for the actual cost after building a similar wind farm outside Germany. They could have a better understanding of component pricing and how to build faster and cheaper. And they may be willing to except lower return on investment. We don’t know for sure. Maybe they will tell us later,” says Østrem.
