Over the last year we have seen some companies pull out of UK offshore wind energy, notably Shell, whilst others buy in. More recently we have seen even the big players hesitate with Centrica delaying construction of its 250MW east coast Lincs wind farm by at least a year. The company is blaming supply chain issues after reviewing the project’s economics.
Centrica had reached the stage of talking to wind turbine manufacturers and contractors but has now put the brakes on. The company said that difficulties had arisen for the Lincs project partly because of the current economic climate, although the same issues were being experienced with other capital intensive projects such as gas power stations.
The British Wind Energy Association (BWEA) – trade association for the wind industry is to put forward measures to the government next month with recommendations for how to deal with the increasing costs of offshore wind. These are likely to include government underwritten loans for offshore wind energy projects and tax allowances similar to the tax credit in the US. It is hoped that such measures will give the offshore wind industry the confidence it needs to push ahead in the short term in order to complete the second round of UK offshore wind farms.
Tax credits and underwritten loans would be more effective than adjusting the renewable obligation certificate value as this would potentially affect other renewable energy technologies compromising the ability of the government to meet climate change reduction targets.
