SSE has scrapped plans to invest £20bn in four major offshore wind projects and cast doubt on “the viability of the wider offshore wind sector.”
The move is a blow for the government, which has committed billions of pounds of consumers’ money into subsidising offshore wind farms and has hailed plans for a new turbine factory in Hull as proof that its “strategy for offshore wind is working.”
However, SSE has said that limited subsidies and high costs threatened the viability of the offshore wind industry and that returns on a series of projects were still not sufficiently attractive for it to invest.
It would therefore “narrow significantly the focus of its near term development plans” for offshore wind. It may build just one of its planned offshore wind farms, the 750MW Beatrice project, but only subject to a series of conditions including reducing its stake in the project.
SSE said that it would sell its 50pc stake in the 340MW Galloper wind farm and would not invest in the 690MW Islay wind farm “in the foreseeable future.”
It also had no “near-term” plans to invest in construction of the SeaGreen and Forewind projects and would only get them to the stage of gaining consent to be built.
“SSE does not plan to extend its commitment to the projects until it has achieved sufficient confidence in the viability of the wider offshore wind sector,” it said.
Jim Smith, SSE’s managing director for generation development, said that offshore wind farms had to overcome two “major, related hurdles.” One was the government’s Levy Control Framework cap on green energy subsidies which “has the reasonable objective of controlling costs to customers from government energy policies – but which also means there is limited support for offshore wind.” The second was cost, as “the future of offshore wind farm development depends on a sustainable and lower cost supply chain.”
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