The German utility said it made the decision after recognising the "significant technical challenges specific to the zone" and comparing it with the viability of its other UK offshore projects. In short, the company is working on other projects that are easier to complete and do not require technology beyond the current crop of turbines and foundations being tested.
However, the decision to drop Atlantic Array, one of the largest UK offshore projects to have been exited, comes amid a climate of uncertainty for UK offshore developers and problems in RWE's home market.
RWE's move also comes against a backdrop of issues in the German company's home market, including job cuts and a comment from CEO Peter Terium that the company was passing through a "vale of tears" while promising to make cuts to its operations. RWE reported a EUR 73 million loss in the third quarter of 2013. Job cuts are planned as well. In the UK alone - a day after the Atlantic Array announcement - RWE made 1,400 redundancies to its UK operations, albeit in the name of subsidiary Npower.
Scrapping offshore wind farms could be easier than cutting jobs. Out of RWE's four UK offshore projects - Dogger Bank, Gwynt y Mor, Triton Knoll, and Atlantic Array - Atlantic Array was one of only two the company was not locked into with other firms. The other one, Triton Knoll, has been under development for longer and is arguably better suited to development with its deep sand seabed. An investment has also already been made in an expensive radar system for the local air force base.
Although a planning application was filed in June, there is no doubt Atlantic Array had struggled through the development process. At the start of 2013 RWE aimed to install 417 turbines in the Bristol Channel. In May it reduced this figure by 139, following environmental concerns and local feedback, while it still hoped to limit any reduction in capacity by using larger turbines. RWE said this is unrelated to the project cancellation.
Outlining the reasons behind its decision, RWE said the wind farm faced substantial technical challenges. These include bedrock, a water depth of 45 metres, difficult currents and challenging seabed conditions.
Incidentally, shortly after this, Scottish Power cited similar reasons for postponing Argyll Array in western Scotland.
Asked why it did not spot the potential problems with Atlantic Array earlier, given that the Bristol Channel is a known quantity, RWE said it needed to make a proper study of the area.
However, according to those familiar with the project, the environment at Atlantic Array has been known for a number of years. Peter Crone, director of Zero Carbon Marine, said it was no more challenging than others being developed. "If you believe (RWE's reasoning) you believe that zones 1 and 2 are doomed. Navitus Bay (offshore wind farm) has a huge overlay of sands and gravel."
Zero Carbon Marine will continue its association with the project, he said: "We're going to ask the Crown Estate what their intentions are and are looking at taking it further, at least until it's consented." The Crown Estate, however, was adamant the site could not be developed commercially.
There may be life for Atlantic Array beyond being a test bed for floating turbines. One surprising aspect of RWE's development process is that it did not install an anemometer in the area, so the wind capability is unknown. It is therefore questionable how RWE's cost analysis stacks up. Based on studies in the land area around the Bristol Channel it looks like the area, helped by the fact it faces onto the open Atlantic, could deliver average wind speeds of around 10m/s.
If so, this, coupled with the fact it is so close to land, may make it a more cost-effective site than RWE has allowed.