Earlier today, Swedish energy group Vattenfall announced the suspension of its ambitious offshore wind power project, Norfolk Boreas, in the UK.
The project, one of the largest in the offshore wind pipeline, had been anticipated to power 1.5 million homes in its initial phase and was part of Vattenfall’s major developments.
However, the 1.4GW Norfolk Boreas project faced an uphill battle due to a substantial 40% increase in costs, which dealt a major blow to the company’s earnings to the tune of SEK 5.5 billion (£410m).
Energy UK responded to the news – the trade association’s Deputy Director, Adam Berman, stated, “The shock news that Vattenfall has paused work on a major offshore wind project should be a wake-up call.
“With offshore wind playing such a critical role in our future energy ambitions, it’s deeply concerning when a project that was already underway is stopped in its tracks.”
The energy industry has been voicing warnings about the way the current investment climate poses a real threat to the UK’s energy security.
Jess Ralston, Head of Energy at the Energy and Climate Intelligence Unit, weighed in on the news, pointing out how costs of wind farms have been driven up by ongoing high gas prices causing supply chain inflation, similar to other industries.
Ralston added, “If the government gets the policy wrong on the current round of renewables auctions and doesn’t keep pace with increasing costs, the UK could end up even more reliant on foreign gas, leaving households on the hook with higher bills.
“Doubling down on renewables, which remain much cheaper than gas, means in future price spikes we’ll be less exposed.”
The offshore wind industry is rallying for the UK Government to take swift action in setting out fresh policies.
RenewableUK’s Chief Executive, Dan McGrail, expressed disappointment at the suspension of the Norfolk Boreas project.
Mr McGrail said: “As Vattenfall has pointed out, costs have been increasing significantly in the offshore wind supply chain, as they have for all major infrastructure projects and in the wider economy.
“Going forward, ministers are going to have to take account of these global inflationary pressures, which have significantly changed the economic landscape.
“We need a stronger industrial strategy for the sector, which the Chancellor should support with new measures in the Autumn Statement as a matter of urgency.”
Claire Mack, Chief Executive of Scottish Renewables, has sounded a clear warning in response to Vattenfall’s announcement.
Mack said: “Today’s announcement from Vattenfall is a major wake up call for the UK Government who are failing to take account of the increased cost pressures and economic challenges facing offshore wind developers.
“If projects in England are pausing development because they are not commercially viable then the projects that we have here in Scotland, which are more expensive to operate than those elsewhere in the country, are under threat and are clearly even more vulnerable to these cost pressures.”
A Department for Energy Security and Net Zero spokesperson told Energy Live News: “We understand there are supply chain pressures for the sector globally, not just in the UK, and we are listening to companies’ concerns.
“The UK is a world leader in offshore wind farms, home to the four largest in Europe, with enough capacity to power the equivalent of at least 10 million homes per year.
“The move to annual auctions was introduced in response to calls from industry to run more frequent auctions and is set to bolster further investment and increase developer confidence in the sector every year.”
