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Investor confidence returns offshore

Doubts about the progress of the first round of UK offshore wind farms appear to be fading as an increasing number of projects move forward to the next stages. Fears have been that a number of developers were getting cold feet about committing money to see the projects built. But the government's decision at the end of last year to extend the Renewables Obligation to 2015 seems to have been the catalyst to give project developers and investors the confidence to proceed.

The government's strong incentives for developing offshore wind power stations in Britain are countering the perception that it is a high risk investment. Projects are proceeding, albeit a little later than scheduled

Doubts about the progress of the first round of UK offshore wind farms appear to be fading as an increasing number of projects move forward to the next stages. Fears have been that a number of developers of first round sites -- each of 30 turbines and within 12 nautical miles of the coast -- were getting cold feet about committing money to see the projects built. But the government's decision at the end of last year to extend the Renewables Obligation (RO) to 2015 beyond the original 2010 horizon seems to have been the catalyst to give project developers and investors the confidence to proceed. The RO legislation obliges electricity retailers to acquire a specified volume of their sales from renewable sources of energy.

Of the 17 offshore sites in UK waters with development licences granted in 2001, only one project is so far fully commissioned: npower renewables' 60 MW wind farm at North Hoyle off north Wales, which has been online for nearly a year. Two further projects are well on the way to commissioning and several are in the process of tendering for the construction contracts.

The next to come fully online will be the 60 MW Scroby Sands project off Norfolk, owned by E.ON UK Renewables (formerly Powergen Renewables before the purchase of Powergen by German utility E.ON). It is operational and was due to have been commissioned by the end of August, but the weather intervened. Half the turbines have undergone reliability tests and the last tests were to be completed this month.

E.ON is also assessing tenders for the construction of its 60 turbine double project in the Solway Firth, a fjord marking the north-west border between England and Scotland. The company says the time is now right to proceed with the project. "We wanted to leverage as much experience from Scroby as we could," says David Farrier from E.ON UK Renewables. "We now have that experience and can build it into the terms and conditions for Solway." He hopes to award the turnkey contract before the end of this year. The final hurdle will be to gain a capital sanction from the board of the company's German parent.

Off the coast of Kent in the Thames estuary, turbine installation vessel MPI Resolution arrived at Kentish Flats in July and began work one month later on installing the foundations of Danish power company Elsam's 90 MW project. This is the first contract for the ship since the offshore business of its former owner, Mayflower Energy, was acquired by Marine Projects International which is backed by Mizuho International, the London arm of a major Japanese bank.

By early September, the first 12 foundations were in place, with the remainder due by the end of November. The turbine installation is scheduled for March with commissioning by the end of July 2005. In a change of plan brought about by the Vestas and NEG Micon merger, Elsam has opted for 3 MW Vestas V90 machines instead of the NEG Micon NM92 turbines. The turbines will be the biggest in Britain and for a few months the project will be the UK's largest, on land or offshore.

Also due for completion in 2005, albeit later in the year, is the 90 MW Barrow wind farm in the east Irish Sea off north-west England using 30 Vestas 3 MW turbines. The turnkey contract was awarded in July by energy giant Centrica and Danish Oil and Natural Gas to a consortium of Scotland's Vestas-Celtic Wind Technology and Kellogg Brown & Root. It gives Vestas machines a clean sweep of all offshore contracts so far awarded in Britain.

Centrica, meantime, is progressing two other projects on the opposite side of England. At the end of June, it sent out invitations to tender for the turnkey contract to build two 30 turbine wind farms at Inner Dowsing and Lynn in the North Sea off Lincolnshire. The company expects to make a decision on the turbine supplier early next year.

Gunfleet Sands

GE Wind is to start work on building its Gunfleet Sands project in the North Sea next year. According to Dan Pearson from the company's UK team, the foundations will be installed in 2005 with erection of the GE 3.6 MW turbines in 2006. He says the company opted for the "low risk strategy" of constructing the project over two years.

EdF Energies Nouvelles, 50% owned by French power group Electricité de France, at last appears to be making some movement on its Burbo Bank project in Liverpool Bay off the English west coast. According to Adrian Maddox of development consultants Wind Prospect, Energies Nouvelles (formerly Siif) will soon be issuing tenders for a contract to carry out bore hole investigations. He adds the company "is going great guns" on the project.

Maddox believes many of the first round developers have delayed progress on their sites in the expectation that costs would come down. The assumption was that experience from the first projects would provide reassurance about offshore technology -- particularly for financial backers and insurers, he says. "The perception was that the price of installing projects offshore was going to drop, but that has not been the case," he says. Indeed, Vestas' problems at its demonstration Horns Reef plant off the Danish west coast (Windpower Monthly, June 2004) has led to caution in the financial community. Nonetheless, Maddox says a UK offshore plant of 30 turbines "is still going to generate good revenue under the Renewables Obligation."

EdF Energy's second UK project, off the Norfolk coast at Cromer, east England, has progressed to discussions with contractors who have pre-qualified to tender for a wind farm. But its Teesside project in the north-east is one of three offshore wind farms still awaiting siting consent. This will not be forthcoming until EdF can resolve concerns raised by the Royal Society for the Protection of Birds (RSPB), a powerful charity, and English Nature, which it must consult by law.

Bird bother

Birds, in the form of the common scoter, are even more of an issue at the triple site of Shell Flats in the Irish Sea. The RSPB has widely publicised its concerns about the effect the 90 turbines would have on the large numbers of the sea duck which spend their winters at the site off Blackpool. Yet an application for siting consent has been lodged by the site's three developers: Shell Renewables, Elsam and ScottishPower. Rob Hastings of Shell Renewables accepts that it could take some time to gain consent. "We have not given up on it," he says. "There is a lot of good work we have done in trying to find solutions to the concerns of English Nature and RSPB. We are still pretty confident that this work will produce the result we want and that it will satisfy the various stakeholders."

A couple of question marks hang over the future of United Utilities' Scarweather Sands project. Despite being approved for consent by the Welsh National Assembly's planning committee, the project is almost certain to go before the full assembly for final approval. Even if it makes it over the permitting hurdle, the fate of the project is bound up with the future of the company's Green Energy business, which United Utilities put up for sale in the summer. According to Ian Latta from UU Green Energy, the group had an "overwhelming response" to an information memo about the sale. "Meanwhile, all our efforts are focused on getting a yes vote in the Welsh Assembly," he says.

Perhaps even more uncertain is the future of npower renewables Rhyl Flats project, along the coast from the North Hoyle station. It appears to be on the back burners while the company progresses its more ambitious second round site, Gwynt y Môr, further out than both North Hoyle and Rhyl Flats. Gwynt y Môr could be as large as 200 turbines generating up to 750 MW. Npower renewables has already started public consultations and is holding local exhibitions of its plans in September and October.

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