London approves giant wind farm

By Ed Crooks
Published: May 12 2009 17:58

The London Array, set to be the world’s biggest offshore wind farm, has been given the go-ahead after being rescued by generous government subsidies.
The companies behind the project said they were proceeding with the first phase, at an estimated cost of £2bn, to put 175 turbines into the Thames estuary.

Its total capacity will reach 630 megawatts, four times the size of the largest offshore wind farm in operation today.
In January Eon, the German company that owns 30 per cent of the Array, said the project was ”on a knife edge” because of soaring costs and a shortage of financial support.
Paul Golby, chief executive of Eon UK, said on Tuesday: ”With current commodity prices and carbon prices, the London Array would not have been viable without additional support.”
In last month’s Budget the government changed the Renewables Obligation, the subsidy scheme for electricity from wind, waste and other renewable sources, to provide greater funds for offshore wind farms.
Projects approved this year receive twice the annual subsidy, known as “renewables obligation certificates”, paid to onshore developments.
That change sparked criticism from rival wind power generators. One described the measure as the ”’let’s get the London Array built’ clause”.
The government has put a high priority on the London Array, which was described by Gordon Brown on Tuesday as a ”flagship” project for his ambition to cut carbon dioxide emissions and secure energy supplies.
Frank Mastiaux, the chief executive of Eon’s global renewables business, said: ”It has been the upgrade to the renewables obligation certificates that has allowed us to get this into the economic range of other projects.”
He added that the Array had also been helped by the recession. Prices for raw materials used to manufacture turbines, such as aluminium and steel, had fallen ”by a mile”, he said, and the project partners were able to negotiate much better rates with suppliers. The turbines will be supplied by Siemens, the German engineering group.
The London Array has had a troubled history. Last year Royal Dutch Shell, one of the original partners alongside Eon and Dong Energy of Denmark, pulled out, saying it wanted to concentrate on onshore wind in the US, where the technology had a longer record and the returns were more certain. Shell has since said it has no plans to invest further in wind power, because oil and gas projects offer better returns.
The projects received a boost when Masdar, the Abu Dhabi renewable energy group, joined the consortium.
However, hopes that renewable energy would create large numbers of jobs in Britain took a blow last month when Vestas, the Danish wind turbine producer, said it was cutting 600 jobs in Britain and probably closing its factory in the Isle of Wight.
Ed Miliband, the energy secretary, said the renewables industry was going through difficult times worldwide, but the go-ahead for the London Array was a vindication for the government’s policies.
”People are thinking about where to invest, and this is a very big signal about investment in the UK.”
Environmental campaigners welcomed the decision, but urged the government to do more to support Britain’s renewables industry, including turbine manufacture.
Andy Atkins of Friends of the Earth said: ”Ministers must ensure that more projects like this are developed so that Britain reaps the huge employment, business and environmental benefits of clean, green energy.”
Copyright The Financial Times Limited 2009