Wind farm in doubt after backer quits
One of the UK’s largest wind farm projects is in doubt after the credit crunch has forced a backer to pull out.
Statoil, the Norwegian oil giant, is now looking for a new joint venture partner to help develop the £700m offshore wind project off the Norfolk coast. If built, the 108 turbines would provide enough electricity for the homes of a city the size of Cambridge.
Statoil’s original partner, the Nobel Peace Prize-winning company Ecoconcern, pulled out about two months ago. It is understood that the European green energy firm could not raise the £350m finance needed to fund its share of the construction costs.
In August, the then business secretary John Hutton gave planning approval for the Sheringham Shoal project. But since then all forms of debt financing, particularly for large risky projects like offshore wind, have become much harder.
Statoil wants to find a new partner to share the project risk. The firm has not decided whether to press ahead alone if it cannot attract a new partner.
The Sheringham Shoal wind farm is the latest to be hit by the credit crunch, which industry executives say could make it impossible for the government to meet its extremely ambitious European Union renewable energy targets.
The government is looking for renewables like wind to provide about a third of the UK’s electricity by 2020. Currently only about 5 per cent comes from such sources.
In August, Shell pulled out of the London Array project, the world’s largest offshore wind farm project. Last month Abu Dhabi sovereign wealth fund Masdar stepped in to rescue the scheme, but its completion is likely to be delayed.
Industry sources said other sovereign wealth funds were also looking to take stakes in struggling offshore wind farm projects. James Knight, a director of Augusta & Co investment bank, said: ‘While debt markets have become more challenging for offshore wind in recent months, it’s encouraging to see sovereign wealth funds seeing clear value opportunities in this space.’
Smaller wind projects are not as affected by the credit crunch.
Juliet Davenport, chief executive of renewable electricity supplier Good Energy, said: ‘New financing from banks for larger offshore wind projects is closed until the new year. But there is still some interest in taking equity stakes in projects. Most smaller wind projects are not having problems securing financing.’
This month German energy firm RWE bought a 50 per cent stake in Scottish and Southern Energy’s £1.3bn offshore wind farm, at Greater Gabbard, off the Suffolk coast. Last week Swedish firm Vattenfall bought the £800m Thanet wind farm, developed by Warwick Energy, from the Christofferson Robb hedge fund.
Tim Webb
Industrial Editor
16 November 2008
Tags: Wind power, Wind energy
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