RWE scraps Atlantic Array offshore wind farm in UK

LONDON -- Germany's RWE has scrapped plans to build the £4 billion Atlantic Array offshore wind farm in Britain because of "market conditions and significant technical challenges."

These challenges are understood to relate to the seabed of the Bristol Channel, in southwest England, where the wind farm was to have been built.

Paul Cowling, director of offshore wind at RWE Innogy, said the decision was not "taken lightly, however given the technological challenges and market conditions, now is not the right time for RWE to continue to progress with this project." (Watch his explanation in the video clip below.) He said RWE would instead "focus on the other less technically challenging offshore projects within our extensive offshore pipeline of up to 5.2 GW" and added that "offshore wind remains one of the strategic objectives for RWE and the U.K. has a major role to play within our portfolio."

"The commercial reality means that in the current market conditions, overcoming the technical challenges within The Bristol Channel Zone would be uneconomic for RWE at this time," Cowling said.

The 220-turbine Atlantic Array was planned in an area of 200 square kilometers, about 16.5 km from the English coast and 22.5 km from the south Wales coast. Its proximity (13.5 km) to the Lundy Island nature reserve had generated strong opposition from environmentalists.

Ben Warren, environmental finance leader at consultants EY, said that some investors were wary of the U.K. because of the government's Electricity Market Reform, an overhaul of the electricity market that affects everything from nuclear to renewables.

"Uncertainty surrounding the current energy framework in the U.K. is widening the time gap between investors announcing their intentions and taking action. As a result, the sector, and offshore wind in particular, are left susceptible to that mood of uncertainty," he said. "What we see is a trend for developers to walk out of the U.K. market or push back investment decisions and primary funds for the construction of new renewable energy plants in the U.K. falling by 45 per cent between 2009 and 2012.

"If this trend continues, it could jeopardize billions worth of investment and thousands of much needed jobs."

Huub den Rooijen, head of offshore wind at The Crown Estate, took a more pragmatic view of the Atlantic Array decision: "Now that the industry has been developing projects for a number of years, there is a much deeper understanding of the characteristics of successful projects and we will see further attrition in the time to come."

He added that "paradoxically, this is a positive development, because it provides greater clarity to key stakeholders such as supply chain and consenting bodies, and brings greater focus to the investment opportunities."

Gordon Edge, director of policy at trade body RenewableUK, said: "Wind turbine technology is evolving extremely rapidly, so it's reasonable to expect that sites which aren't viable now will become so in the future. For example, a unique project to build an offshore wind farm with turbines on floating platforms in U.K. waters has just been announced. We're continually learning how best to harness some of the most powerful forces in nature, so that we can make a successful transition from fossil fuels to cost-effective low-carbon renewables."