Energy giant RWE has pulled the plug on developing one of the world’s largest offshore wind farms amid concerns that political pressure over household bills could stifle investment.
The German group, which also owns Big Six supplier npower, said the costs of the Atlantic Array project in the Bristol Channel were “prohibitive in current market conditions”.
Energy firms are under pressure after steep recent rises in gas and electricity tariffs but argue that they need profits to be able to invest in power generation including from renewable sources.
Latest figures showing Big Six profits from household supply multiplied five-fold in three years have sparked further anger.
The Government said RWE’s decision to abandon the Atlantic Array project, whose cost is reportedly £4 billion, was made “on purely technical grounds”.
RWE Innogy, which was developing the site, said it presented significant challenges including deep waters and adverse seabed conditions and it would focus instead on more technically and economically viable offshore projects.
The challenges had been identified from “intensive research”, it said, adding that new technologies could open it up again in the future.
Paul Cowling, director of offshore wind at RWE Innogy, said: “This is not a decision we have 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.”
Mr Cowling said RWE was still backing offshore wind and would be pressing ahead with other projects off Britain’s coastline.
But he added: “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.”
The 240-turbine project had drawn criticism from environmentalists concerned about its impact on marine wildlife and campaigners who have branded 720ft (219m) high turbines unsightly.
Trade organisation RenewableUK said the decision was disappointing but not surprising as the project was “always going to be technically challenged” because of its deep-water, seabed location.
Chief executive Maria McCaffery told the BBC Radio 4 Today programme: “When the whole energy sector is under such pressure to reduce costs, they really can’t take the chance of deploying in a place where it would be more expensive because ultimately that would have to be translated into fuel bills.”
A spokesman for the Department of Energy and Climate Change said: “The decision not to proceed with the development is a matter for RWE.
“It was made on purely technical grounds and reflects the many complex challenges of constructing offshore wind farms.
“The UK still expects to deploy significant amounts of offshore wind by 2020 and we remain well placed to meet our 2020 renewable energy target.”
The National Trust, which manages Lundy Island in the Bristol Channel, welcomed the decision to pull the plug on the scheme.
Simon Pryor, natural environment director, said: “This is an enormous relief.
“We have said all along that proposing such a huge wind farm so close to such a wild and beautiful coastline was disastrous.
“It would have had a massive impact on the views from some of our most spectacular coast in North Devon and South Wales, as well as Lundy Island.
“The Atlantic Array was at the wrong scale and in the wrong place.
“We’ve always said that the process that arrived at that site was flawed and call on Government to rethink how we identify and license these sites in the future.
“We’re totally committed to renewable energy and hope that this presents an opportunity for a better discussion on how we best harness energy from the Severn estuary – one of the places with the highest potential for tidal power.
“There is a need to find a strategic solution and a plan-led approach to harnessing energy in a way that maximises generation, minimises the landscape impacts and enhances the natural environment.
“This can be achieved if we look at a real mix of generation at a smaller scale and more carefully chosen locations.”
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