RWE Delays Nordsee Offshore Project

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- RWE AG (OTC:RWEOY) (Essen, Germany) has postponed its first German offshore wind project blaming uncertainty over ongoing grid connection issues with the government.

A decision on the 295-megawatt (MW) Innogy Nordsee 1 Windfarm was expected this year but the German energy giant has now pushed it back until sometime in 2013, claiming it is waiting for the government to introduce legislation that will guarantee compensation for energy companies if there is a delay in connecting windfarms to the electricity grid. Nordsee 1 will be located in the German North Sea, around 30 kilometres north of the island of Helgoland.

In May, RWE's incumbent chief executive, Peter Terium, launched a €100 million ($126 million) offshore wind vessel that will be used to build the company's first German offshore windfarm at Nordsee. For additional information, see May 25, 2012, article - RWE Bets on Fair Winds for Future Energy.

The Nordsee site will eventually contain three windfarms, Nordsee 1 (48 turbines), Nordsee 2 (48 turbines) and Nordsee 3 (60 turbines), with a potential generating capacity of approximately 1,000 MW. RWE got the green light for Nordsee 1 from the Federal Maritime and Hydrographic Agency in April. All three windfarms were scheduled to be completed within the next few years at a cost of €3 billion ($3.7 billion).

RWE and E.ON have both complained about grid connection problems, ranging from cabling issues to getting approval for substations, over the past year. The companies argue that without any official compensation system in place to cover the cost of delays, they will not move ahead with vital investment in Germany's tiny offshore wind segment.

"As long as the liability issue of the network operators for delays and failures is not regulated, I will not propose any further projects to the Board of RWE AG, since they would have no chance of approval," explained RWE CEO, Peter Terium.

Earlier this month, the government announced plans for a draft bill to deal with the issue. "With the planned liability arrangement we provide wind park investors and grid operators with the necessary security needed for the further development of offshore wind power," commented Germany's Environment Minister, Peter Altmaier.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.