Weekly News Review - 21st July 2023
Vattenfall halts work on Norfolk Boreas wind farm due to spiralling costs
Swedish energy giant Vattenfall is to stop working on the Norfolk Boreas offshore wind farm as a result of increasing development costs. They also announced that two other sites in the region, Vanguard East and Vanguard North, will be reviewed. The Norfolk Boreas project was set to be one of the largest in the UK with an initial capacity of 1.4GW and had been anticipated to generate enough electricity to power 1.5 million homes.
The project was awarded a CfD contract in last year’s allocation round at a record low strike price of £37.35 per megawatt hour (MWh). However, supply chain costs have increased by an estimated 40% in the past year which has meant that the project is no longer economical. According to its latest results, the decision to stop work at Norfolk Boreas has cost Vattenfall £415 million.
Vattenfall Chief Executive Anna Borg said: “Offshore wind is essential for affordable, secure and clean electricity, and it is a key element of Vattenfall’s strategy for fossil-free living. But conditions are extremely challenging across the whole industry right now, with a supply chain squeeze, increasing prices and cost of capital, and fiscal frameworks not reflecting current market realities.”
“Vattenfall believes in the strong fundamentals and rationale for the Norfolk projects. However, considering market conditions today, we are stopping the current development track for Norfolk Boreas and evaluating the best way forward for all three projects in the Norfolk Zone.”
Industry experts have warned the government that future CfD rounds need to reflect the increase in supply chain costs. Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, said: “Costs of wind farms have been driven up by ongoing high gas prices causing supply chain inflation, just like for other industries.”
“If the government gets the policy wrong on the current round of renewables auctions and doesn’t keep pace with increasing costs, the UK could end up even more reliant on foreign gas, leaving households on the hook with higher bills. Doubling down on renewables, which remain much cheaper than gas, means in future price spikes we’ll be less exposed.”
British nuclear revival to move towards energy independence
Energy Security Secretary Grant Shapps has this week announced the launch of a new body to support the nuclear power industry. Great British Nuclear (GBN) has been created to drive the rapid expansion of new nuclear power plants in the UK at an unprecedented scale and pace. The launch at the Science Museum in London on Tuesday was delayed from last week after it clashed with the government’s public sector pay deal announcement.
GBN aims to boost UK energy security, reduce dependence on volatile fossil fuel imports, create more affordable power and grow the economy, with the nuclear industry estimated to generate around £6 billion for the UK economy. The government have also announced funding that will kick-start competition for game-changing small modular reactor (SMR) technology, which could result in billions of pounds of public and private sector investment in SMR projects.
The funding package could reach £157 million and includes up to £77 million for companies to accelerate advanced nuclear business development in the UK and up to £58 million funding for the further development and design of a type of advanced modular reactor (AMR) and next generation fuel. The government said it was still committed to Hinkley Point C and also Sizewell C, which has already been backed with £700m of public funds.
Energy Security Secretary Grant Shapps said: “Britain has a rich history as a pioneer of nuclear power, having launched the era of civil nuclear power – and I’m proud to be turbocharging its revival and placing our country once again at the forefront of global innovation.”
“By rapidly boosting our home-grown supply of nuclear and other clean, reliable, and abundant energy, we will drive down bills for British homes and make sure the UK is never held to energy ransom by tyrants like Putin.”
“Today, as we open Great British Nuclear and the competition to develop cutting-edge small modular reactor technology, which could result in billions of pounds of public and private sector investment, we are seeing the first brush strokes of our nuclear power renaissance to power up Britain and grow our economy for decades to come.”
Viking Link joins UK and Denmark power grids for first time
The Viking Link interconnector between the UK and Denmark has been connected for the first time. National Grid confirmed that the laying of the world record 475-mile high-voltage cable has now been completed, marking a significant milestone for the £1.7 billion project.
Construction on the interconnector began in 2019 and is due to be completed by the end of the year. The cable connects Bicker Fen in Lincolnshire with Jutland in Denmark. Once completed the 1.4GW interconnector will be able to transport enough electricity to power 1.4 million UK homes.
Viking Link will be the UK’s ninth interconnector to Europe following the existing links with France, Ireland, Netherlands, Belgium and Norway. The new link with Denmark will take the UK’s total interconnector capacity up to 9.8GW. In their most recent Future Energy Scenarios publication, National Grid have forecast that up to 27GW of interconnector capacity could be installed by 2050.
Rebecca Sedler, Managing Director for Interconnectors, said: “This is a fantastic moment for the UK and Denmark, and a key milestone for the world record project as we join the electricity networks of our two countries for the first time. After years of planning and construction work, today’s announcement is testament to the hard work and dedication of our team and our partners on both sides of the connection.”
“Interconnectors bring huge benefits to the UK, acting as clean energy super-highways, allowing us to move surplus green energy from where it is generated to where it is needed the most. That means that we can import cheaper and cleaner energy from our neighbours when we need it, and vice versa.”
“As countries begin to integrate more offshore wind generation into their energy systems, interconnectors will become critical for transporting clean and green energy and helping to manage the intermittent nature of renewable sources.”
Recent News
Want to talk about how this weeks news affects you?
Get in Touch Today
If you wanted to talk about any of the news items we have shared this week and how it could affect you and your organisation, then get in touch with our teams today.
