German firm scraps wind farm plans

Reuters/London

Germany’s RWE has scrapped plans to build the world’s largest offshore wind farm in British waters only a month after warning that political wrangling over green energy was endangering billions of pounds of investment.

RWE’s nPower said that the Atlantic Array project off southwest England, which would have featured up to 240 wind turbines and powered as many as 900,000 British homes, no longer made economic sense in current market conditions.

The cost of the project has been estimated at as much as £4bn. The decision to abandon the Atlantic Array follows Prime Minister David Cameron’s promise to cut some green levies, stoking speculation that the world’s sixth-largest economy may change how it funds renewable energy and prompting environmental groups to question Britain’s green credentials.

“It really doesn’t help when you’re a political football,” Gordon Edge, director of policy for trade association RenewableUK, said of the growing debate around energy and environmental costs in the run up to the 2015 election.

“Until quite recently there was political consensus ... but there’s been a growing drumbeat about the size of the bills. There’s been a febrile atmosphere, and that’s really not helpful.”

Britain’s biggest energy companies have come under intense scrutiny since the leader of the opposition Labour Party, Ed Miliband, sought to address soaring household energy bills by pledging to cap prices if he is elected in 2015.

Cameron, who once promised to form the greenest government ever, called the plan a gimmick but pledged to remove so-called green taxes and social levies that contribute nearly 10% to domestic energy bills.

Paul Coffey, chief operating officer at RWE’s renewable energy division Innogy, had been quoted by the Guardian newspaper in October as saying he could not invest on promises and blaming the political row over energy for the uncertainty that had descended on the sector.

“The next six months are critical,” he said, “but politicians are treating the issue as a political football to beat up the utility companies.”

RWE’s nPower - along with British Gas, ScottishPower , E.ON, EDF Energy and SSE - is one of the big six companies that dominate Britain’s energy market.

British energy regulator Ofgem says the Big Six, which have blamed rising gas and electricity bills on green levies, wholesale energy prices and the cost of using the national grid, made a profit of £53 per household customer last year, up from £30 in 2011.