A number of projects have already been put on hold as result of burgeoning US demand coming from the Production Tax Credit regime.
The latest project to suffer is the 100 MW E.ON UK and Energi E2 Scarweather Sands offshore wind farm that will see 30 turbines built next to the Scarweather sandbank off the South Wales coast in Swansea Bay. The project has now been postponed until 2008-09, “because the scheme is not currently financially viable,” E.ON says, referring to the major demand for turbines, foundations and cables which has added a 30-50% premium to prices seen, for example, on the comparable 167 MW Energi E2 Nysted project off the Danish coast.
Jason Scagell, director of E.ON UK Renewables, said: “We’ve taken a close look at the tenders and have reluctantly decided that building Scarweather simply isn’t possible under current market conditions,” adding: “Demand for the supply of key components such as turbines, offshore cabling and foundations is so high at the moment that it’s very difficult to make projects cost effective.”
Erik Kjaer Soerensen general manager, Project Development, E2 Wind Energy, said: “Despite this setback we’re hopeful that, by 2008, those market conditions will have changed in our favour.”
The project will continue to progress the remaining pre-construction activities until the construction tender process is reactivated in the final quarter of next year.
The news follows the recent release of third quarter results from major turbine manufacturer Vestas which included downward revisions for expectations over the year on the back of supply chain constraints.
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