Future of wind farms in doubt

Danny Fortson

BRITAIN’s biggest developer of offshore wind farms has hired Rothschild to sell stakes in its projects because it cannot afford to build them.
The move by Dong Energy, the Danish power giant, casts fresh doubt on the government’s carbon-reduction plans just six months after it ramped up subsidies to keep the offshore wind sector afloat.
Nuclear power and offshore wind are the main pillars of the government’s plan to slash pollution. Ed Miliband, energy secretary, will underline their importance when he delivers the national policy statement on energy tomorrow.
Construction costs, however, have soared. Dong has plans to develop wind farms with a capacity of 3 gigawatts, enough to supply more than 2m homes, but they will cost more than £10 billion to build — twice the price just three years ago. “The issue is that these projects require enormous amounts of capital and it’s getting very difficult to justify,” said an industry source. “The enthusiasm there once was has diminished.”

The crunch comes at a critical time. Within the next month the Crown Estate, owner of Britain’s seabed, will award the rights to develop a batch of enormous offshore sites that are meant to make up the bulk of the UK’s renewable energy capacity.
Dong is expected to sell down stakes in projects where it has 100% ownership, such as the £1 billion Walney farm in the Irish Sea.