Yahoo Finance Major wind farm project off Norfolk coast revived after German developer steps in
A key wind farm project off Norfolk that was scrapped in the summer over soaring costs, has been revived after a takeover by Germany’s RWE.
Swedish utility firm Vattenfall spent more than a decade getting permission to build the Norfolk Boreas wind farm, 40 miles off the UK’s east coast.
But in July, it halted the scheme after realising that the price it had agreed with the UK Government for the power it would generate was far too low.
It announced today it had sold the project to RWE at the cost price of £963m - along with the rights to two other schemes, Norfolk Vanguard East and Norfolk Vanguard West.
The three projects, known collectively as the Norfolk Wind Zone, will have a combined capacity of 4.2 gigawatts - roughly enough for 3-4m homes. All three sites have the consent needed from the Government to go ahead.
Vattenfall confirmed the sale after pausing work on the Boreas sites earlier this year, saying that the finances simply no longer stacked up.
It had agreed a strike price - the minimum price guaranteed by the Government - of £37.35, but the industry was then hit by soaring inflation. The latest minimum price being offered by the Government for offshore wind farm developments is £73 - the costs of which will all be added to consumer bills.
An RWE spokesman said it would need the Government to agree to a much higher strike price before Boreas, and the other schemes, could proceed.
“It is clear that the Norfolk Boreas project is not deliverable under the contract that Vattenfall secured,” they said. “The costs and supply chain issues have been recognised by the Government and we would hope to secure a [new] contract for Norfolk Boreas that allows us to make a final investment decision in the future.”
The trading of such massive UK wind farm sites between entirely foreign utility operators illustrates the growing scale of overseas ownership in the UK’s emerging renewables industry. Earlier this week Orsted, majority-owned by the Danish government, announced plans to build Hornsea 3 - another huge wind farm in the North Sea that could power 3m homes.
Once complete each project will funnel profits out of the UK and into the coffers of overseas shareholders.
RWE already operates 10 offshore wind farms across the UK and the Norfolk acquisition means it is developing nine more. It is also constructing the 1.4 GW Sofia offshore wind project in the North Sea off the UK’s east coast.
Tom Glover, RWE’s UK chairman, said: “The timely and efficient deployment of offshore wind is essential to ensure the UK’s domestic energy security, as well as achieving our net zero targets.
“We very much welcome the UK Government’s recent decisions on future offshore wind auctions which provides us with the confidence to invest and represents a positive step in maximising the UK’s clean energy potential, ensuring sustained and lowest prices for consumers and creating good quality jobs.”
Sven Utermöhlen, chief executive of RWE Offshore Wind, said: “I am very happy that we will work with Vattenfall towards facilitating team continuity to ensure the successful handover and further development of the projects. Equally I am looking forward to continuing the work with the supply chain companies.”
Closing of the transaction is subject to approval by the Crown Estate and regulatory approvals, and expected for the first quarter of 2024.
