How should we invest in new pipelines and cables in the North Sea?

These are big questions, debated both heatedly and quietly, from different standpoints and with different ambitions. We have recently started work to analyse, as a whole and up to 2050, the opportunities to use and export electricity, hydrogen and natural gas, and how robust different investment strategies are across possible future scenarios for Norway and Europe. We presented the first step at the 22nd International Conference on the European Energy Market (EEM 2026).

In this first analysis, we looked at which energy exports from the Norwegian continental shelf we should prepare for, and whether an emerging German hydrogen market would trigger hydrogen production in Norway. It is a big assumption that a hydrogen market will develop in Germany. Most people are more pessimistic today than they were five years ago, and hydrogen projects are taking longer than expected at the time. We still think it is important to examine this possibility.

To understand the opportunities for exporting hydrogen and electricity, and the risks that come with investment, the analyses clearly need to cover a range of future European market prices for natural gas, electricity and hydrogen. The natural gas price also affects the electricity price, because Europe relies heavily on gas-fired power. We expect this link to persist but weaken gradually, as renewable generation and other sources of flexibility set the price in more and more hours.

Our study shows that an emerging but limited hydrogen market in Germany would make it attractive to produce hydrogen in Norway, except in scenarios with low electricity prices in Europe. In those cases, it is sometimes more profitable to produce the hydrogen in Germany. Under certain combinations of natural gas and electricity prices, hydrogen volumes are also lower than otherwise. This applies to the somewhat less likely combination of natural gas prices up towards 80 €/MWh and power prices that rise no more than 20–30% above the base case.

The study also shows that the hydrogen would be produced by reforming natural gas, with 94% of the CO₂ from the process captured and stored permanently on the Norwegian continental shelf. This in turn shapes investment in offshore wind. At natural gas prices below 60 €/MWh, investment goes mainly to bottom-fixed offshore wind. At higher gas prices, electrolysis-based hydrogen production is also built, which drives growing investment in floating offshore wind. Bottom-fixed offshore wind therefore appears to be a robust investment, while floating offshore wind depends on more specific conditions.

The study thus confirms that Europe’s transition strategy, together with the geopolitical situation, will affect the potential for profitable hydrogen production in Norway. For example, natural gas prices could fall if renewable power is built out on a large scale, so that hydrogen can be produced at low energy cost. Europe is already building hydrogen-ready gas power plants, and hydrogen could also provide large-scale seasonal storage. A development in which both electricity and natural gas prices fall could be driven by a combined wish for greater energy security and for decarbonising the European energy system. Germany’s plan to phase out all use of fossil energy by 2045 is one example. Continued heavy dependence on LNG bought at high prices, in a global market marked by unrest and conflict, would instead keep natural gas prices at a higher level.

Great-power rivalry also affects Europe’s energy system, both directly (the closure of the Strait of Hormuz is a clear example) and indirectly, through the way it shapes political choices in Europe. Policies for increased energy security, industrial development, further cuts in greenhouse gas emissions and protection of biodiversity will affect energy markets and matter a great deal for what counts as good management of the resources on the Norwegian continental shelf. That makes it essential to understand which factors matter most for profitability, both for industry and for Norwegian society, and what it could cost us to choose the “wrong” solutions because the future turned out differently than we expected. This understanding will also show us whether there are robust investments and priorities that will hold up whatever the future brings.

This article is based on Investment strategies for energy infrastructure on the southern Norwegian Continental Shelf, funded by FME InterPlay. InterPlay is a Centre for Environment-friendly Energy Research (FME) that develops knowledge and models for planning an integrated energy system, in which electricity, heat and gas are planned together rather than separately. The host institution is SINTEF Energy Research, and the Centre is funded by the Research Council of Norway and Centre partners.