Offshore wind developers hit the brakes in Britain

afr.com:

London | Swedish energy giant Vattenfall has halted a massive British offshore wind project, throwing a sharp spotlight onto surging costs in an industry that is only just getting started Down Under.

Vattenfall said it would stop work on the 1.4 gigawatt Norfolk Boreas wind farm, off England’s eastern North Sea coast, after a 40 per cent surge in costs.

Rollercoaster… Britain’s booming offshore wind industry has been hit by a perfect storm. Bloomberg

The company will also weigh up the “best way forward” for two other projects in the same zone, each of which is also 1.4 gigawatts. Vattenfall’s planned investment in the three projects is estimated at more than £10 billion ($19 billion).

Wind farm developers across Europe have been warning for some time about bottlenecks in their supply chains, particularly as manufacturers of wind turbines and components struggle with rising costs and surging demand.

The offshore wind sector’s woes are many: double-digit inflation, elevated steel prices, rising borrowing costs in a capex-intensive industry, and skills shortages that also spur steeper wages growth. These are compounding into what some in the industry are calling “an inflection point” for the sector.

“The market for offshore wind power is challenging,” said Vattenfall CEO Anna Borg. “Higher inflation and capital costs are affecting the entire energy sector, but the geopolitical situation has made offshore wind and its supply chain particularly vulnerable.”

Other offshore wind developers with projects on the British coastline are also reportedly hesitating over their final investment decisions, as are some in continental Europe.

Government-subsidised “strike prices” – awarded under “contracts for difference” that smooth out