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Plans for new UK offshore windfarm halted over cost fears

  • Publish Date: Posted 9 months ago
  • Author: Steve Walia

​The government is being encouraged to intervene with support after plans to build a huge new offshore wind farm were halted due to rising costs. The wind farm is poised to provide clean wind energy for up to 1.5m UK homes, but Vattenfall, the Swedish developer, says that the project will now be reviewed after costs rocketed by 40% since its announcement.

 

The developer has also said that it is prepared to absorb a huge £415m impairment cost that will be levied for halting the development. It announced in its quarterly results that all new wind development projects were being pressured by hugely increased capital costs.

 

It added that financial frameworks hadn't yet been able to adapt to meet the changing financial conditions in the market.

Vattenfall won the rights to build the Norfolk Boreas project in Norfolk in the last round of competitive auctions in 2022. This round was the fourth CfD allocation window and was set at a fixed price of £37.25 per MWh. This would have applied for 15 years, based on prices in 2012 and inflation-linked.

 

However, the price is no longer considered to be economically viable by the developer, with ongoing concerns about the combined pressures of challenging economic conditions and upward trending inflation. This will have a significant effect on materials costs and project development.

 

The developer is now reviewing the best route towards the development of its Norfolk zone projects, which includes similar planned developments at Vanguard West and East. Together, these projects are planned to deliver clean energy to 5 million customers as part of the UK's transition towards a net-zero economy by 2050.

 

The government is now being called upon to respond to these challenges with appropriate support for the entire wind development industry.