Swedish utility company, Vattenfall (VATN.UL), has announced the suspension of its ambitious 1.4 gigawatt (GW) Norfolk Boreas offshore wind project in the coastal region of Britain. The project was envisioned to supply power to approximately 1.5 million homes. The decision, stated in the company's recent earnings report on Thursday, is expected to impact earnings by a significant 5.5 billion Swedish crowns ($537 million).
The Norfolk Boreas project had secured a contract-for-difference (CfD) through an auction held last year. The agreement guaranteed a minimum price of 37.35 pounds per megawatt hour (MWh) in 2012 prices for the electricity generated, equivalent to about 45 pounds/MWh at present.
However, since the auction (referred to as round 4), several developers have expressed concerns about soaring project costs, inflation, and rising interest rates, which could render the price guarantee provided during the auction unsustainable. They have urged for targeted support to ensure the viability of the projects within the sector.
In addition to the suspension of the Norfolk Boreas project, Vattenfall also revealed plans to assess the optimal way forward for the broader Norfolk zone, encompassing the Vanguard East and West projects. The combined output of these three projects was expected to reach 4.2 GW of electricity.
The United Kingdom has set an ambitious goal of expanding its offshore wind capacity to 50 GW, a significant increase from the current 14 GW, as part of its commitment to meet climate targets and bolster energy security. The suspension of the Norfolk Boreas project raises questions about the challenges faced by the renewable energy sector in achieving these targets and underscores the need for further support and strategic planning.
