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Offshore wind gets recovery money -- EU cash to energy projects

Offshore wind projects in Europe will receive EUR 565 million in aid if an agreement reached between the Czech presidency of the EU Council and the members of the European Parliament is rubber-stamped by the full parliament at its meeting in the first week of May. The money for offshore wind is part of a EUR 3.98 billion package of EU funds that will go to energy projects up to 2010 under the EUR 5 billion European economic recovery plan for tackling the financial crisis.

Other beneficiaries of the package are interconnection projects for EU transmission networks for gas and electricity, which receive EUR 1440 million and EUR 910, respectively, projects for carbon capture and storage (CCS) of emissions from fossil fuel generation (EUR 1.05 billion) and small island projects (EUR 15 million). The money for energy comes from a pot of unspent agricultural funds.

Most of the offshore wind money, EUR 315 million, will be allocated to two projects for integrating electricity from offshore wind farms into the onshore grid system: one for a joint interconnection for the three Kriegers Flak projects in the Baltic Sea, and the other for the first steps towards developing a North Sea electricity grid. The remainder is shared between three offshore wind power projects: Borkum West II, Germany, for the development of next generation 5-7 MW wind turbines, wind turbine-testing at Aberdeen offshore wind farm in Scotland, and upscaling installation of deepwater turbines at Thornton Bank, Belgium.

In an informal compromise agreed between the EU presidency and the European Parliament's industry committee, any unspent money from projects that fail will be used for other renewables and energy efficiency projects.

Reallocation

The European Wind Energy Association (EWEA) welcomes the funds for offshore wind and grid infrastructure. But its chief executive Christian Kjaer doubts that the much larger sums allocated to CCS will do anything to aid economic recovery. "The technology will not be commercially viable this side of 2020," he says. "EWEA therefore supports the ... proposal to allocate any unspent money to renewable energy technologies, including onshore wind power, which can be employed immediately."

Others have more fundamental reservations about the proposed allocation of economic recovery plan funds. The European co-ordinator for offshore grids in the North Sea and Baltic Sea, Georg Wilhelm Adamowitsch, says it is not the "European way" and can cause in-fighting among the different countries of the EU -- some of which will benefit more than others.

The reason that some of the offshore projects earmarked for funding have not materialised so far has nothing to do with difficulties with finding finance, he believes. "They have a financing plan," he says. But due to other problems these projects have not been "realistic propositions" until now.

Subsidy folly

Taking an example, Adamowitsch highlights as folly the European Commission's original plan to also include Germany's Alpha Ventus offshore wind farm for subsidy, which at one time was in line for a share of EUR 150 million together with an adjacent German project using untried technology, Bard Offshore 1. Alpha Ventus is backed by energy giants E.ON and Vattenfall, which are capable of financing the projects on balance sheet.

Alpha Ventus was later replaced by Borkum West 2, Nordsee Ost and Global Tech 1, which, with Bard Offshore I, will share EUR 200 million. Adamowitsch also questions the wisdom of granting EUR 200 million of EU funds to the Nabucco gas pipeline industrial conglomerate. "These are companies which have money enough," he says.

The package of energy funding still remains to be agreed at the plenary meeting of the parliament on May 4-7 and to be formally adopted by member states.

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