Renewables and green energy solutions on the rise
Our analysis shows that the market for renewables and green energy solutions in Norway is dominated by large industrial players.
The renewables segment includes Norwegian legal entities within renewable energy sources and sustainable energy solutions, excluding hydropower. Our goal going forward is to quantify the size and development of this diverse industry and analyze the dynamics across the value chain by applying the same methodology developed to analyze the OFS. However, we have included production companies when analyzing the renewables segment as these value chains tend to be more integrated compared to the value chains in OFS, where the line separating OFS and E&P is clear. We have built a database of companies for which their primary operation is within one of our predetermined subsegments.
The renewables segment has been divided into seven subsegments — battery technologies, biofuel, onshore wind, offshore wind, solar, hydrogen and carbon capture.
Renewables and green energy solutions
The segment has received increased attention over the last few years as sustainability issues become integral aspects of businesses in all industries. Our analysis shows that the market for renewables and green energy solutions in Norway is dominated by large industrial players, mainly operating in other industries such as O&G and are looking to diversify their revenue streams to more sustainable solutions. As such, companies with renewables and green energy solutions as their main business area still have a relatively small portion of the total market.
The segment is characterized by large capex requirements, and the majority of the companies are still in an early development or growth phase. When comparing the segment composition of renewables and green energy to OFS, there are clear structural differences between the two, highlighting the differences in the industries’ life cycles. Nearly two-thirds of the companies in the renewables and green energy segment have revenues less than NOK10m and account for just 2% of the segment’s aggregate revenues. When looking at the size distribution per subsegment, we find that biofuel is the largest segment among micro companies. We believe we will see strong growth in this segment as the Norwegian government continues to increase demands for the use of biofuel in road transport and aviation. However, a majority of biofuels used in Norway are still imported from other countries.
We see that most revenues come from the more traditional subsegments of onshore wind and solar and we believe these will continue to dominate the segment going forward. However, we have seen that subsegments such as hydrogen, battery technology and carbon capture have received increased attention from investors, and we believe new players will continue to emerge.
The majority of all hydrogen companies in our database have less than NOK10m in revenues, and none have more than NOK100m. Furthermore, nearly half of them were founded within the last three years. This suggests that these firms still are early in the commercialization phase focusing on R&D, where they can recruit high skilled labor from the traditional OFS companies. The hydrogen segment is mainly driven by startups, but we also expect to see more of the existing OFS firms venturing into green energy. Offshore wind is a segment that requires a set of skills and services closely related to what OFS companies have delivered historically. Since Norwegian authorities recently committed to open for the development of offshore wind on the NCS, we expect to see an acceleration of traditional OFS companies shifting their focus towards renewables.