The U.K. risks failing to attain the 10 gigawatts of offshore-wind power it says is possible by 2020 unless the country does more to curb construction and financing hazards for developers, Bloomberg New Energy Finance said.
“The government is anxious to convince investors and banks that it has built a cost-effective incentive system to drive the construction of offshore wind projects in the next few years,” said Sophia von Waldow, an offshore-wind analyst at Bloomberg New Energy Finance. “We are not convinced that it has yet done enough to minimize the complex web of risks that these projects, often in deep water and far from shore, will face.”
Deployment of 10 gigawatts of offshore wind, almost triple the current installed base, is achievable by 2020, according to the government. The U.K. has shifted support to offshore wind from onshore to meet carbon and renewable-energy targets by 2020 without alienating voters opposed to turbines in rural areas.
Iberdrola SA (IBE)’s Scottish Power unit on Dec. 13 dropped plans to build a wind farm off the U.K. coast, citing technical challenges. RWE AG (RWE) on Nov. 26 abandoned a project off the coast near Bristol because engineering hurdles made it too costly.
Risks “at all project stages” may affect the payments to generators under the government’s new system of contracts-for-difference, which guarantees set rates for electricity produced in renewable power stations, BNEF said today in a statement.
The government on Dec. 4 raised proposed power prices for offshore wind at projects that start generating in 2018, while holding rates from next year. It cut payments to onshore wind and solar. It said the 10 gigawatt figure isn’t a target.
Even with the increase, curbs on total payments to low-carbon energy may limit offshore-wind construction, London-based BNEF said. Other risks include possible building delays, cuts in project sizes and lower-than-expected generation, it said.
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