Centrica’s plan for a £2bn wind farm off the coast of Norfolk has been snubbed by ministers, who rejected a request for it to qualify as one of the first wave of new energy projects.
The decision casts renewed doubt on the Race Bank plan, after The Telegraph revealed last month it would not go ahead unless planned subsidies were increased.
Ministers on Wednesday responded to months of industry lobbying by announcing an increase to the level of subsidies that will be paid to offshore wind farms that start operating in 2018-19.
But they also revealed Centrica’s project was not among those picked for a “go early” stage of new investments, making them eligible for subsidy contracts before the Energy Bill becomes law.
The Energy department said the successful projects had been selected “against criteria to make sure they were technically and financially viable, and would contribute to wider industry development”.
The 16 projects that did qualify include coal-to-biomass conversion projects by Drax and Eggborough power stations and three offshore wind farms proposed by Dong Energy.
A Centrica spokesman said the decision was “disappointing news”. The company says Race Bank could generate enough power for 450,000 homes.
“We continue to believe that Race Bank is one of the best consented offshore projects in the UK and we will now work with DECC to understand how they reached their decision and we will continue to review all our options for the project,” he said.
Subsidies for offshore wind farm projects are to be cut over the rest of the decade as costs of the technology are reduced.
But the industry had warned that subsidies were being cut too steeply under draft plans this summer, putting investment at risk.
Renewable UK said the increase announced yesterday would enable more so-called “round three” projects – those further offshore in deeper waters – to be built.
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