Dong Halts German Offshore Windfarm

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) -- Dong Energy A/S (Fredericia, Denmark) has halted plans to develop another German offshore windfarm due to delays in getting the project connected to the grid.

Denmark's largest energy company is blaming German grid operator, TenneT TSO BV (Arnhem, Netherlands), for its decision to mothball the proposed windfarm which will have a generating capacity of around 346-megawatts (MW). The decision will put a dent in the German government's plans to develop around 10,000-MW of new offshore wind capacity by 2020.

"Due to the lack of the contract for the grid connection for the Borkum Riffgrund II project being awarded, we have been forced to suspend the development and construction," Christoph Mertens, director of Dong Energy Wind Power in Germany, told media. "We will put it back into Dong Energy's development pipeline."

The delay will mean not proceeding with a potential order for almost 100 offshore wind turbines from German engineering firm, Siemens AG (NYSE:SI) (Munich, Germany).

This is not the first time that Dutch-owned grid operator TenneT has come under fire from energy companies in Germany, with both E.ON AG (OTC:EONGY) (Dusseldorf, Germany and RWE AG (OTC:RWEOY) (Essen, Germany) blaming the company for offshore project delays.

In August, RWE announced that it was postponing its first German offshore wind project, blaming uncertainty over ongoing grid connection issues with the government. The company halted the development of the 295 MW Innogy Nordsee 1 windfarm and pushed back a final decision until sometime next year. For additional information see July 31, 2012, article - RWE Delays Nordsee Offshore Project.

Last month, the German government set out to reduce the delays in getting offshore windfarms built by introducing a bill that will see consumers and grid operators being charged more if there are any more serious delays to getting windfarms built and connected to the grid. The new bill will see consumers paying up to €0.25 cents per kilowatt hour (KWh) if there are delays to offshore power reaching the grid. There will also be fines imposed on the grid operators. For additional information, see September 3, 2012, article - German Bill to Drive Offshore Projects.

Dong has been very active in 2012 in its efforts to secure a strong foothold in the developing German offshore wind sector. In August, the company acquired three offshore projects in the German North Sea in a deal worth €157 million ($193.6 million). The projects, bought from PNE Wind AG (Cuxhaven, Germany), are known as Gode Wind I, II, and III and have a potential generating capacity of almost 700 MW. For additional information, see August 20, 2012, article - Dong Buys Three German Offshore Projects.

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