London Array wind farm developers seek bailout

European Investment Bank asked to guarantee project to build world's largest offshore wind farm after credit crunch and collapse in energy prices scare off backers
Tim Webb
guardian.co.uk, Wednesday 8 April 2009 19.21 BST

The developers of London Array, the project to build the world's largest offshore wind farm in the Thames estuary, have approached the European Investment Bank for a bailout.
The German energy company E.ON and its Danish partner Dong Energy have yet to commit to providing the £3bn they estimate is needed to build the giant wind farm, whose future hangs in the balance.
A project of this scale has never been built before. A collapse in electricity prices in the last 12 months means it would generate less cash, while the credit crunch has added to the uncertainty. Shell pulled out of the project last summer amid fears over the project's viability.
A spokeswoman for the EIB would not confirm that the bank was in talks with the London Array developers but said: "We are committed to funding offshore wind projects in the UK and are currently in discussions with project promoters who are actively promoting wind projects."
Negotiations are understood to be at an early stage. E.ON does not expect to make a final decision on whether to go ahead with the project until the summer.
The EIB, which has more than €400bn (£360bn) of lending at its disposal, is owned by European Union member countries. Its purpose is to lend to public infrastructure projects which, for example, would help member countries meet their renewable energy targets.
In the UK, the EIB has already offered €100m to Fluor and Scottish and Southern Energy, developers of the £1.3bn Greater Gabbard offshore wind farm.
There are fewer subsidies available for offshore wind farms in the UK compared with elsewhere in Europe, where developers are guaranteed a high price for the electricity they generate in the form of a feed-in tariff. As a result, most UK offshore wind farms that are in the planning stage have been shelved. Paul Golby, chief executive of E.ON UK, admitted recently that the economics of the London Array project were on a "knife-edge".
Energy companies are pressing the government to provide more subsidies to make building offshore wind farms viable. The UK will miss its renewable energy target if London Array and dozens of other offshore projects are not built.