UK efforts to spice up renewable power have suffered a serious setback after one of many nation’s largest offshore wind farm tasks was halted attributable to surging prices.
Swedish power group Vattenfall on Thursday stated it had suspended improvement of its 1.4GW Norfolk Boreas wind farm after prices on the mission rose 40 per cent.
Elevated price was placing “vital stress on all new offshore wind tasks”, the corporate stated, including that it could “not take an funding resolution now” on the mission and would e-book an impairment cost of SKr5.5bn ($537mn).
“What we see at present, it merely doesn’t make sense to proceed this mission,” stated Vattenfall’s chief govt Anna Borg.
The UK authorities is looking for to greater than triple offshore wind capability by 2030 — from about 14GW to 50GW — to assist decarbonise the nation’s electrical energy system.
Norfolk Boreas had been one of many largest new tasks within the offshore wind pipeline, set to assist energy 1.5mn houses. The wind farm was attributable to be the primary of three to be constructed by Vattenfall within the UK on the east coast, to energy greater than 4mn houses in complete.
The wind business has warned over the previous few months that rising rates of interest together with turbine and labour prices have been placing UK tasks in danger.
The British authorities final yr awarded the Norfolk Boreas mission a contract guaranteeing a set worth of £37.35 per megawatt-hour for its electrical energy for the primary 15 years, in 2012 costs and linked to inflation. Ministers celebrated a sum that was properly under those agreed in earlier years.
Nonetheless, builders have argued that surging prices linked to provide chain issues within the wake of Russia’s full-scale invasion of Ukraine imply the tasks might not be economically viable underneath these phrases.
Vattenfall’s announcement is prone to heap stress on the federal government, which is within the strategy of awarding the subsequent spherical of fixed-price contracts. Builders have already warned that the utmost worth of £44/MWh in 2012 costs can be too low.
Mads Nipper, chief govt of Ørsted, the world’s largest offshore wind developer, informed the Monetary Instances final month that it was “inconceivable” that UK tasks weren’t struggling.
The opposite two Vattenfall tasks could possibly get greater authorities contracts, which means they might nonetheless go forward, Borg stated. “We are going to now look into the state of affairs and discover one of the best ways ahead for all these tasks — the power is desperately wanted,” she stated.