One of the UK’s biggest offshore wind farm projects has been halted due to rising costs, a major blow to the UK government as it tries to encourage more investment in renewable power to meet net zero targets.
Swedish energy group Vattenfall said it had halted development of its planned Norfolk Boreas wind farm after costs on the project surged 40 per cent.
Norfolk Boreas had been one of the biggest new projects in the offshore wind pipeline, set to power 1.5mn homes in the first phase of major developments by Vattenfall.
The 1.4GW project was awarded a contract from the government last year, guaranteeing it a fixed price of £37.35 per megawatt-hour for its electricity for the first 15 years, in 2012 prices and linked to inflation.
Vattenfall said it had not made a final investment decision on the project and would book an impairment charge of SKr5.5bn ($535mn).
“Increased cost of capital puts significant pressure on all new offshore wind projects,” it said in quarterly results on Thursday. “So far, financial frameworks have not adapted to reflect the current market conditions.”