German utility RWE has scrapped a $7 billion plan to build one of the world’s largest offshore wind parks in Britain, as soaring gas and electricity prices fuel uncertainty over the Conservative government’s commitment to renewable energy subsidies.
RWE said it would not go ahead with the proposed 1.2 gigawatt (GW) Atlantic Array wind park off southwest England.
Reuters newsagency reports the Atlantic Array would have featured up to 240 wind turbines with the potential to power as many as 900,000 British households.
“This is not a decision we have taken lightly, however given the technological challenges and market conditions, now is not the right time for RWE to continue to progress with this project,” Paul Cowling, director of offshore at RWE’s renewable energy unit Innogy, said in a statement.
Britain’s energy sector has come under intense scrutiny in recent months, after Labour opposition leader Ed Miliband said he would cap prices following years of steep rises, forcing the government on to the back foot.
Reuters reports in response, Conservative Prime Minister David Cameron has said he would cut so-called green taxes.
Environmental taxes and social charges contribute nearly 10 per cent to domestic energy bills, which average more than $2134 a year for each household.
The six energy companies that dominate Britain’s energy market, which include RWE, have defended steep price rises, blaming green costs, wholesale prices and the cost of using the national grid.
The move comes as figures show that energy firms reaped a 77 per cent increase in profits per customer last year, due to bill increases that the big six say are partly due to government green levies.
Reuters reports offshore wind parks have a relatively high-risk profile compared with onshore sites, as turbines are installed in open water and need to withstand more challenging weather conditions such as higher wind speeds.
“We will continue to focus on the other less technically challenging offshore projects within our extensive offshore pipeline of up to 5.2GW,” Mr Cowling said.
RWE, under pressure from plunging wholesale power prices, a boom in renewable energy capacity in its home market as well as Germany’s decision to abandon nuclear power by 2022, is in the process of a major restructuring.
This has led it to slash about 13,000 jobs, or about 18 per cent of its workforce since 2011 and to halve its dividend for this year.
Burdened by €30.8 billion of debt, the group has embarked on a “capital light” strategy, aiming to partly outsource funding for expensive renewable energy projects, including offshore.
