Centrica tight-lipped on Race Bank
All options remain on the table for Centrica’s consented 580MW Round 2 Race Bank project, with the UK utility reiterating that no decision can be made until the dust from Electricity Market Reform has settled.
In an interim management statement published today, in which Centrica revealed that its earnings will be static at best this year, the utility said that it continues “to explore options, including seeking financial partners” for Race Bank, off the coast of Norfolk, eastern England.
No decision can be taken until “the final outcome on the government consultation on Contract for Difference strike prices” has been announced, says Centrica, one of the UK's "big six" utilities.
Whether intentionally or not, Centrica has emerged at the centre of of a battle between UK offshore wind developers insisting that the draft CfD prices are too low, and a government with scant political room for manoeuvre when it comes further financial support for renewables.
As early as this summer Centrica went on the record stating that the draft CfD prices for offshore wind – £155 ($248) per MWh in 2014/15 before falling to £135 per MWh in 2018/19 – were not high enough to prompt an investment at Race Bank.
In February Centrica said it would commit a maximum £200m to Race Bank, despite the project’s estimated £1.5bn price tag.
Yet Race Bank’s role in the CfD tug-of-war was highlighted again earlier this month when the Telegraph newspaper claimed that Centrica was “preparing to abandon” the project.
Among that story’s more controversial assertions was a claim that some government ministers said they would be “happy” to see certain offshore wind projects scrapped altogether – an outcome with potentially devastating consequences for the UK’s offshore wind programme, which is ostensibly supported by all three major political parties.
Centrica did not respond to a Recharge request for further clarity on its positions.
Concerns about the UK’s offshore wind programme have swirled since National Grid published scenarios this summer showing the country may end up with just 8GW of installed capacity by 2020 – a fraction of the ambition expressed by government only a few years ago.
The UK industry is not alone in facing political headwinds, with reports emerging over the weekend that Germany’s new coalition government may slash the country’s 2020 offshore wind target to 6.5GW from 10GW.