Credit crunch threat to wind farm

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Monday, January 26, 2009
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This is Kent

HUNDREDS of jobs in Thanet have been thrown into doubt after plans to build the offshore wind farm were dubbed "pretty difficult" by developers.

The £1.5 billion project, which would plant 270 turbines in the Thames Estuary off Thanet, could be in jeopardy.

  1. Hundreds of jobs could be at risk after the Array was thrown into doubt

    Hundreds of jobs could be at risk after the Array was thrown into doubt

The chief executive of Eon UK, Paul Golby, told the Financial Times that the economics of the group’s bid to build the world’s biggest offshore wind farm are "looking pretty difficult".

The Array is the second wind farm that could be built off the Thanet coast. The first, the Thanet Offshore Wind Farm, has already begun construction from the Port of Ramsgate with a substation being built near the Richborough power station and will be the biggest wind farm in Europe when it is completed in two years’ time.

The London Array is the second one planned for the isle, and it was hoped it would start construction around the time the first project was completed.

But because offshore wind farms are much more expensive to build and maintain than onshore ones, the project has been thrown into doubt.

The Array is being developed by a consortium which includes Eon and Dong Energy.

Eon owns 30 per cent of the Array project. Royal Dutch Shell, the oil group, dropped out last year, to be replaced by Masdar, the Abu Dhabi renewable energy group, which owns 20 per cent. The other half is owned by Dong, the Danish energy group.

It is likely they will ask the Government to raise its level of subsidy, arguing the private sector should not bear the risks from a scheme for the entire country.

Energy companies hoped the recession might ease the capacity shortages that drove up costs, but are asking the Government for more generosity with the Renewables Obligation – the subsidy system for renewable electricity.

Economy boss Roger Latchford said: "Obviously, as we all know, the economic situation at present is very challenging and it is becoming increasingly difficult to get credit for capital investments, so I don’t think these comments come as a huge surprise.

"We must remember that this is a long term investment for the benefit of the whole of the country and will do a great deal to help tackle climate change. If there is any danger of this project not receiving the funding it receives from the private sector, then perhaps this is something that the Government needs to look at supporting."

The government published an environmental study today on the feasibility of erecting offshore wind turbines around Britain.

It concluded that there is scope for 5,000-7,000 turbines. That ambition is likely to intensify pressure from the industry for a more generous subsidy scheme.

The FT quotes energy firm Centrica estimating the cost of offshore capacity at £3 million per megawatt, more than double what it costs to build nuclear stations.

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