Galloper Offshore Windfarm Cancelled

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--German energy major RWE AG (FWB:RWE) (Essen, Germany) ditched plans for the construction of the 340-megawatt (MW) Galloper offshore windfarm, off the Suffolk coast in England, due to "unacceptable risk."

This is the latest in a number of offshore project cancellations in the past year that undermine the U.K.'s goal to roll out 25,000 MW of new wind power from its Round 3 licensing for offshore wind development.

"RWE has recently reviewed the development status of the Galloper offshore wind farm as a Renewable Obligation Certificate (ROC)-accredited project," RWE Innogy said in a statement. "Despite positive investor interest, including that of the Green Investment Bank, and support from the project's supply chain partners, we are disappointed to announce the decision not to continue with the development of Galloper in its current form. This decision reflects the tight time scales available to secure financing, whilst still achieving accreditation under the Renewable Obligation, which overall results in an unacceptable balance of risk and reward as compared with the investment disciplines embraced by the RWE Group."

RWE said it will discuss the next steps for the Galloper project with its existing partner, SSE plc (Perth, Scotland), which owns 50% of the project. However, in March this year Industrial Info reported on SSE's decision to abandon a number of offshore projects, including Galloper, which it said it had no plans to take beyond the current phase of development. SSE said it planned to sell its share.

In March, the company drastically reduced its interests in a number of large offshore wind projects worth more than €24 billion ($32.9 billion). For additional information, see March 31, 2014, article - SSE Slashes Offshore Wind Plans.

In response to RWE's Galloper announcement Maria McCaffery, chief executive of U.K. renewable energy industry body RenewableUK, said: "Offshore wind projects stopping unnecessarily should be a matter of concern for the government. RWE's announcement shows that getting projects actually built can't be taken for granted, even after they've received consent and even after early construction work has begun. The fundamental changes introduced by the government to provide financial support for renewables--the transition from the Renewables Obligation to Contracts for Difference--have left developers working under extraordinarily challenging conditions. In some cases, the level of financial risk is now so great that major projects are grinding to a halt".

Last December, RWE Innogy pulled the plug on the massive 1,500-MW Atlantic Array Project proposed for the Bristol Channel, blaming technical difficulties over building in deeper waters and adverse seabed conditions. For additional information, see December 2, 2013, article - RWE Scraps Giant U.K. Offshore Windfarm.

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