By Karl-Erik Stromsta & Ben Backwell in London
Tuesday, November 26 2013
Updated: Tuesday, November 26 2013
RWE blames the relatively deep water and adverse seabed conditions in the zone, saying the technical challenges make the project economically prohibitive “in current market conditions”.
Instead, it will shift its focus to progressing “more technically and economically viable” offshore wind projects, noting that even in the absence of Atlantic Array its pipeline stretches to 5.2GW.
Richard Sanford, head of offshore wind projects at RWE told Recharge: “This is a very challenging project technically and if you look at the costs and the revenues, the economics won’t work.
“The Crown Estate has carried out its own review and reached the same conclusion.”
“Water depth is 45 metres, the sea bed conditions are challenging with a lot of bed rock, there are high tidal ranges, and the costs of the sub-structures mean it's not viable.”
Sanford added: “RWE has a huge portfolio...so we want to focus on the remaining 5GW which are far more attractive.
“We have plenty of work to do. Procurement is underway for Galloper and we hope for a final investment decision (FID) mid-2014. Both companies (partners RWE and SSE) are committed to the project."
Sanford said the company was also moving ahead with Triton Knoll and initial phases of the Dogger Bank zone.
“It's sad when a project has disappeared but it’s the right thing to do, to focus on those projects that are going to happen,” Sanford said.
An RWE press spokesman stressed that the decision was not purely made on the basis of expected support under the UK government's incoming contracts-for-difference (CfD)-based support scheme.
"[We are] still very hopeful that the government will do enough on CfDs to make projects work and still genuinely hope they will deliver what they have promised."
RWE submitted the planning application for Atlantic Array this summer, having shrunk the project from an initial 1.5GW nameplate capacity. The Atlantic Array – 16km off north Devon and 22km off the Welsh coast – was accepted for examination by the UK’s Planning Inspectorate in July.
The scrapping of Atlantic Array comes amid a significant retrenching at the German utility, which is in the process of halving the headcount of its renewables arm, RWE Innogy, and selling its two new offshore wind installation vessels.
“This is not a decision we have taken lightly,” says Paul Cowling, director of offshore wind at RWE Innogy.
“Offshore wind remains one of the strategic objectives for RWE, and the UK has a major role to play within our portfolio,” Cowling says, pointing to the under-construction 576MW Gwynt y Mor project.
The Crown Estate, which owns the UK seabed, has agreed to terminate its agreement with Innogy for the Bristol Channel zone.
Further attrition at UK offshore wind projects is to be expected in the months and years ahead, said Huub den Rooijen, head of offshore wind at the Crown Estate, in response to RWE’s decision.
“Paradoxically,” says de Rooijen, RWE’s decision represents a “positive development” for the UK offshore wind sector. “It provides greater clarity to key stakeholders such as supply chain and consenting bodies, and brings greater focus to the investment opportunities.”
Innogy has undergone a major divestment this programme as it refocuses on “core” areas and projects.
Nevertheless, as recently as last month Innogy told Recharge that following its next-in-line Galloper and Nordsee Ost projects, the next offshore wind projects it would likely pursue would be either Triton Knoll or a zone within Atlantic Array.
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