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.”

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.”

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