Several proposed offshore wind farms may be scrapped due to a lack of UK Government subsidies, the head of energy giant ScottishPower has said.
Chief corporate officer Keith Anderson said it was cutting the size of its planned 240-turbine East Anglia offshore wind farm because the budget for subsidies to be awarded this year was "not big enough". The project could be scrapped if it did not secure a subsidy in 2014, reports the Daily Telegraph.
Those offshore wind farms that do get built in coming years will be unnecessarily expensive because ministers are effectively forcing companies to build smaller projects, preventing them from developing economies of scale, he claimed. As a result the government would miss its own target for cutting offshore wind's costs by 2020, Mr Anderson, the former head of the Offshore Wind Industry Council, forecast.
Ministers are preparing to award subsidy contracts for new projects in a "reverse auction" over coming months, but the maximum available budget is barely half the size the wind industry had expected, Mr Anderson said.
Mr Anderson told the Telegraph that ScottishPower was being forced to scale back its proposed 1.2GW wind farm off the coast of East Anglia in order that its total annual subsidy requirement would be less than £235m - the maximum budget being awarded this year. Even then, it risked losing out to rival projects.
"There will be more applications than there is budget," Mr Anderson confirmed. "I think on the back of the auction there will be a lot of companies re-examining what they do with their projects and whether they are viable any more."
