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Tuesday, November 26, 2013

Off shore wind farm in Bristol Channel cancelled

The Western Mail reports that work on the planned Atlantic Array windfarm between Gower and North Devon has been stopped after German firm RWE branded the scheme 'uneconomic'.

The £3bn Atlantic Array project involved 240 turbines, each around 700ft tall covering 124 square miles. It could have powered around 900,000 homes. However, the company says that technical challenges within the Bristol Channel Zone are significant, including substantially deeper waters and adverse seabed conditions:

“Costs to overcome such technical challenges are prohibitive in current market conditions. RWE is to focus on progressing more technically and economically viable offshore projects.

“In comparison with other opportunities in the UK offshore wind portfolio, and in light of the significant technical challenges specific to the zone identified from intensive research, at the current time, it is not viable for RWE to continue with development in the Bristol Channel Zone.

“As the offshore wind industry develops over the next decade and on the back of more viable technologies being demonstrated, expected innovation and cost reduction may in the future open up opportunities in the more challenging areas, such as in the Bristol Channel."

These issues may well be significant but there are justifiable suspicions in my view that this is not the whole story. In particular the uncertainty about the green taxes following Cameron's decision to try and abandon them may have had an impact.

Benedict Brogan made a similar point in yesterday's Telegraph. He says that under Labour, energy policy was blighted by the government’s inability to translate words into deeds on some of the big long-term issues, most notably nuclear power:

Despite the growing warnings that by 2017 Britain would be unable to keep the lights on without either managing demand or allowing prices to rise beyond what is politically acceptable, Labour failed to act. It remains to the credit of the Coalition, and in particular the Lib Dems who surrendered their totemic opposition to new nuclear power, that an agreement was reached to begin building a new generation of reactors that will go some way to replacing those that are being taken out of commission over the next decade. While the process was fraught, and the result looked like a lopsided Jenga tower, Britain had an energy policy that was focused on securing reliable supplies. Even the debate over the exploitation of unexplored shale reserves was heading in the right direction, albeit at a glacial pace.

Mr Miliband put everything in doubt by making affordability the political priority, not security of supply. It wouldn’t have mattered if the Prime Minister and Mr Osborne had reacted as they should have done, indeed as they appeared to initially, namely by dismissing the Labour leader’s pitch for what it was, a con. It was an easy target after all. Any economist can tell you that price controls merely serve to displace increases. Prices would have gone up before the freeze, in anticipation, and after, in compensation. The money lost to the energy companies in the meantime would have to be made up by the consumer. By focusing on price, Mr Miliband opened himself to the charge that he was neglecting the imperative of keeping the lights in favour of easy populism. It is tempting to look to Denmark where energy is deemed so important it is kept away from politics and dealt with on a cross-party basis.

He concludes that the Coalition has been scrambling to find its own energy gimmick:

The Tories are desperate to spike Mr Miliband’s guns because they worry that his offer has found favour with the electorate. In a race for votes, they don’t want to be left behind. At every turn, the Tory tactic is to cut off Labour’s route to power by stealing its ideas or making a counter-offer. Mr Cameron, in effect, has also shifted his ground, from security of supply to affordability, and in the process has opened himself to the charge that he is putting short-term political considerations – his survival in office – ahead of the national interest. No wonder businesses are nervous.

I wonder how much of that was behind the Atlantic Array decision.
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