The company cited tight time scales to secure financing while still qualifying for the soon-to-expire renewables obligation subsidy scheme.
Fellow developer SSE's decision to pull out of the project in September was a major blow to the project's viability, but RWE said that it had been in talks with possible investors, including the UK Green Investment Bank.
This latest announcement will ring alarm bells about the UK government's incoming contracts for difference (CfD) subsidy scheme, with RWE seemingly unwilling to develop the project under this regime.
Concerns have been raised that the budget that has been allocated to fund projects under the CfD scheme will not cover all planned offshore wind projects.
RWE said in a statement that failing to qualify under the renewables obgligation would "overall result in an unacceptable balance of risk and reward".
A spokesperson said that the company would not comment further on the vaibility of the CfD subsidy programme.
The company said that it will continue to progress development at its other UK offshore projects, Triton Knoll and Dogger Bank.
RWE also announced last year that it was scrapping plans for the 1.2GW Atlantic Array wind development in the Bristol Channel after deciding the project is unfeasible.