UK’s renewable energy plans have suffered a setback as Swedish energy group Vattenfall has halted its Norfolk Boreas wind farm project citing a 40% surge in project costs. The 1.4GW wind farm was intended to be the first of three projects with a total investment of £10bn-£11bn. Vattenfall’s CEO, Anna Borg, stated that the increased costs made continuing the project no longer justifiable. The suspension of work on Norfolk Boreas is a blow to the UK’s target of tripling offshore wind capacity to 50GW by 2030.
The decision by Vattenfall raises concerns about the wider offshore wind industry, with independent consultancy Carbon Trust warning that the sector may be facing a genuine crisis. The consultancy urged policymakers to take swift action to prevent other wind farms from following the same path. Developers have been struggling due to rising costs for items like wind turbines and supply chain disruptions caused by the Ukraine conflict.
In addition to the setback for offshore wind, the UK government has delayed a decision on relaxing rules that hamper the development of new onshore wind farms. Both onshore and offshore wind farms are seen as crucial for achieving the country’s net zero targets.
Norfolk Boreas would have been one of the largest offshore wind projects in the UK, providing electricity to around 1.5 million homes with its 140 turbines. Alongside the other two planned wind farms, Vattenfall’s projects off the east coast were set to power more than 4 million households.
Reports earlier this year highlighted that wind farm developers, including Vattenfall and Denmark’s Ørsted, have been seeking tax breaks or subsidies to counter the increase in costs. The need for such support has intensified as the UK government recently pledged around £500 million in subsidies to India’s Tata Group to assist in building a £4 billion battery factory for electric vehicles.
Business and trade secretary Kemi Badenoch, writing in the Financial Times, expressed concerns about competing with countries that offer substantial amounts of money to attract businesses away from the UK. This might be referring to the US’s $369 billion Inflation Reduction Act.
The UK government had previously guaranteed inflation-linked prices for Norfolk Boreas over a 15-year period, starting at £37.35 per megawatt hour at 2012 prices. The suspension of the project will have implications for the UK’s renewable energy goals and raises questions about future offshore wind developments.
