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Shell pulls out of key wind power project

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Financial Times: Shell pulls out of key wind power project

By Fiona Harvey and Rebecca Bream in London
Published: April 30 2008 23:39 | Last updated: April 30 2008 23:39

Plans for a massive expansion of offshore wind power generation were in disarray on Wednesday night after Shell pulled out of the UK’s flagship project.

The London Array was to be the world’s biggest offshore wind farm, with 341 turbines in the Thames Estuary capable of generating 1,000 megawatts of power – enough to power a quarter of London’s homes.

Shell had an equal share in the project with Eon and Denmark’s Dong Energy.

Shell said on Wednesday it was seeking to sell its stake, while increasing its investment in onshore wind farms in the US.

The move is a blow to the government’s plans to meet its renewable energy targets through offshore wind. Difficulties in obtaining planning permission mean there is no chance of the UK meeting European Union renewable energy targets without a massive investment in offshore wind power.

Wind farms off the coast face less opposition, but are more expensive and require higher subsidies to attract developers. John Hutton, secretary of state for business, announced plans last year to build the equivalent of 33 London Arrays by 2020.

Shell declined to give detailed reasons for its decision. The cost of the London Array was estimated at £1bn in 2003 and £1.5bn in 2005, but has risen to at least £2bn to £2.5bn as a global rush to wind energy has driven up the price of turbine components.

Paul Golby, chief executive of Eon, gave a gloomy assessment of the project’s future: “We’re very disappointed by Shell’s decision but will continue to work with them as we look to find a way forward, but I believe that, at the very least, some delay to the project is now inevitable.”

Dong said it was “looking into all options”.

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