Centrica, Dong, Quit Plans for 4.2 GW of Offshore Wind

Centrica Plc (CNA) and Dong Energy A/S abandoned plans to develop as much as 4.2 gigawatts of offshore wind farms in the Irish Sea, citing challenging conditions that made it too expensive to develop.

The partners relinquished the right to develop the 2,200 square kilometer (850 square mile) Irish Sea zone, according to a statement today posted on the website of their Celtic Array venture. Offshore wind projects cost more than double onshore ones over the lifetime of a project, according to calculations by Bloomberg New Energy Finance.

“Our assessments have shown that ground conditions are such that it’s not viable for us to proceed with the technology that’s available at this stage,” the companies said.

U.K. developers have canceled more than 9.5 gigawatts of potential offshore wind farms since November, illustrating the difficulty of driving down the costs of erecting wind turbines in water, dozens of kilometers out to sea. Even so, the U.K. is relying on the technology to help meet its carbon and renewable energy targets, and ministers say it’s possible to develop 10 gigawatts of wind farms at sea by 2020.

“Although it’s disappointing that this particular project isn’t going ahead, the reasons are understandable,” Nick Medic, director of offshore renewables at the RenewableUK lobby group, said in an e-mailed statement. “Overall we still have over 37 gigawatts of offshore wind capacity in the U.K.’s project pipeline, so we’re set to maintain our huge global lead in offshore wind, creating tens of thousands of jobs.”

The U.K. had 3.7 gigawatts of offshore wind-generating capacity at the end of 2013, more than half of the installed global total. It’s offering guaranteed prices of 155 pounds ($262) per megawatt-hour for power from offshore wind farms starting up between now and April 2016, quadruple current prices.

The Crown Estate, which manages the U.K. seabed on behalf of the monarchy, said on its website that it has no current plans to offer the Celtic Array zone to other developers.

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Indranil Ghosh, Abhay Singh

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