Norfolk Boreas Offshore Wind Farm Project Suspended Due to Cost Surges
Posted 20/07/2023 11:24
Swedish energy group Vattenfall has decided to halt the development of its ambitious offshore wind power project, Norfolk Boreas, in the UK, as costs surged by 40%, impacting the company's earnings by SEK 5.5 billion (£410 million).
Norfolk Boreas, a 1.4GW project, was expected to power 1.5 million homes in the first phase of Vattenfall's major developments. However, due to the significant increase in costs, the company refrained from making a final investment decision and booked an impairment charge of $535 million (£413 million) in the half-year financial results.
Anna Borg, President, and CEO of Vattenfall, acknowledged the challenges faced in the offshore wind market, with higher inflation and capital costs affecting the entire energy sector. She stated that the company will examine the best way forward for the entire Norfolk Zone, which includes the Norfolk Vanguard East and West projects, in addition to Norfolk Boreas.
The decision comes after Vattenfall saw cost increases of up to 40% in the offshore wind sector, impacting the future profitability of the Norfolk Boreas project. Despite the growing demand for fossil-free electricity, the offshore wind market faces challenges, particularly due to the geopolitical situation, making the supply chain vulnerable.
Norfolk Boreas, a 1.8-gigawatt project located 45 miles from the shore, received approval from the UK Government in late 2021, with the potential to power nearly two million UK homes. Despite objections from over 80 parish councils citing environmental concerns during underground cable works, Vattenfall defended the project, emphasizing the supply chain opportunities it would bring to the region.
With the suspension of Norfolk Boreas, Vattenfall will assess alternative approaches for the Norfolk Zone, considering the economic conditions and seeking the best path forward for its offshore wind developments.