Friday 10th January 2014

Wind Watch

For a European utility a winter chill should bring a spat of good news. Not so for RWE.

Indeed, as many of you will have seen from one of our earlier bulletins, the German utility has taken the decision to cut by 50% the Triton Knoll offshore wind farm development it is planning. The firm is proposing to reduce capacity from 1200MW to somewhere between 600MW and 800MW.

This of course comes rapidly off the back of the decision the firm made in November to abandon the Atlantic Array project in the Bristol Channel.

It isn’t necessarily a surprise that developers are reducing their ambitions, given the relative uncertainty surrounding UK offshore wind, whilst it’s also worth highlighting that RWE canned the Array project over cost concerns regarding the technical difficulties of installation.

Furthermore, the utility also announced today that it is pursuing the ‘reduced operating hours’ route for its coal and gas fired facilities, rather than investing to retrofit cleaner technologies, or carbon capture storage – a move that will see the closure of 7 UK power plants.

For RWE, it does seem that there is a larger issue at hand. The cost of retrofitting clean technology to carbon heavy power assets is too expensive. This means closing facilities - but this is happening more quickly than the firm probably banked on.

To maintain share in the UK market, RWE must then look at other cleaner generating technologies. And in line with current Government thinking, it has gone big with its offshore wind ambitions.

But to have to abandon one project, and scale back another, especially so close together, doesn’t make for happy reading.

In all likelihood, there may well be sound commercial reasons for the Triton Knoll reduction, which could well have resulted from geographical or engineering complications.

What makes the wider industry look a bit shabby, though, are these very public cancellations and reductions. Were these projects not properly assessed in the first instance? We risk creating the impression of a market where greedy developers and utilities hoover up any project they can get their hands on – whether it is suitable or not.

With consumers feeling the pain of higher electricity bills, it does few favours for the renewable lobby.

As 2014 gets underway, perhaps this latest development should encourage a re-evaluation of the way in which the wind industry and the utilities work together.

At its heart, this should mean that we’re establishing a mutual level of confidence and trust that ensures we’re matching the right projects with the right level of resource and the right level of investment, at the right time.

Wind Watch

For a European utility a winter chill should bring a spat of good news. Not so for RWE.

Indeed, as many of you will have seen from one of our earlier bulletins, the German utility has taken the decision to cut by 50% the Triton Knoll offshore wind farm development it is planning. The firm is proposing to reduce capacity from 1200MW to somewhere between 600MW and 800MW.

This of course comes rapidly off the back of the decision the firm made in November to abandon the Atlantic Array project in the Bristol Channel.

It isn’t necessarily a surprise that developers are reducing their ambitions, given the relative uncertainty surrounding UK offshore wind, whilst it’s also worth highlighting that RWE canned the Array project over cost concerns regarding the technical difficulties of installation.

Furthermore, the utility also announced today that it is pursuing the ‘reduced operating hours’ route for its coal and gas fired facilities, rather than investing to retrofit cleaner technologies, or carbon capture storage – a move that will see the closure of 7 UK power plants.

For RWE, it does seem that there is a larger issue at hand. The cost of retrofitting clean technology to carbon heavy power assets is too expensive. This means closing facilities - but this is happening more quickly than the firm probably banked on.

To maintain share in the UK market, RWE must then look at other cleaner generating technologies. And in line with current Government thinking, it has gone big with its offshore wind ambitions.

But to have to abandon one project, and scale back another, especially so close together, doesn’t make for happy reading.

In all likelihood, there may well be sound commercial reasons for the Triton Knoll reduction, which could well have resulted from geographical or engineering complications.

What makes the wider industry look a bit shabby, though, are these very public cancellations and reductions. Were these projects not properly assessed in the first instance? We risk creating the impression of a market where greedy developers and utilities hoover up any project they can get their hands on – whether it is suitable or not.

With consumers feeling the pain of higher electricity bills, it does few favours for the renewable lobby.

As 2014 gets underway, perhaps this latest development should encourage a re-evaluation of the way in which the wind industry and the utilities work together.

At its heart, this should mean that we’re establishing a mutual level of confidence and trust that ensures we’re matching the right projects with the right level of resource and the right level of investment, at the right time.

Wind Watch

For a European utility a winter chill should bring a spat of good news. Not so for RWE.

Indeed, as many of you will have seen from one of our earlier bulletins, the German utility has taken the decision to cut by 50% the Triton Knoll offshore wind farm development it is planning. The firm is proposing to reduce capacity from 1200MW to somewhere between 600MW and 800MW.

This of course comes rapidly off the back of the decision the firm made in November to abandon the Atlantic Array project in the Bristol Channel.

It isn’t necessarily a surprise that developers are reducing their ambitions, given the relative uncertainty surrounding UK offshore wind, whilst it’s also worth highlighting that RWE canned the Array project over cost concerns regarding the technical difficulties of installation.

Furthermore, the utility also announced today that it is pursuing the ‘reduced operating hours’ route for its coal and gas fired facilities, rather than investing to retrofit cleaner technologies, or carbon capture storage – a move that will see the closure of 7 UK power plants.

For RWE, it does seem that there is a larger issue at hand. The cost of retrofitting clean technology to carbon heavy power assets is too expensive. This means closing facilities - but this is happening more quickly than the firm probably banked on.

To maintain share in the UK market, RWE must then look at other cleaner generating technologies. And in line with current Government thinking, it has gone big with its offshore wind ambitions.

But to have to abandon one project, and scale back another, especially so close together, doesn’t make for happy reading.

In all likelihood, there may well be sound commercial reasons for the Triton Knoll reduction, which could well have resulted from geographical or engineering complications.

What makes the wider industry look a bit shabby, though, are these very public cancellations and reductions. Were these projects not properly assessed in the first instance? We risk creating the impression of a market where greedy developers and utilities hoover up any project they can get their hands on – whether it is suitable or not.

With consumers feeling the pain of higher electricity bills, it does few favours for the renewable lobby.

As 2014 gets underway, perhaps this latest development should encourage a re-evaluation of the way in which the wind industry and the utilities work together.

At its heart, this should mean that we’re establishing a mutual level of confidence and trust that ensures we’re matching the right projects with the right level of resource and the right level of investment, at the right time.