If you want to scupper an offshore wind project then you do not necessarily need to win the argument. You simply keep the argument going so long that key contracts expire.
This is what happened with the planned 468MW Cape Wind in US waters, which just two years ago looked set to be the country’s first offshore wind farm. Wealthy objectors tied up the project in so many legal challenges that the developers could not reach financial close on time. This meant two key power purchase agreements fell apart, leaving the utilities free to walk away, and now permits for infrastructure, including grid links, are expiring too.
There are shades of this in the news surrounding Mainstream Renewable Power’s planned 448MW Neart na Gaoithe wind farm, planned off eastern Scotland.
An ongoing legal battle led by RSPB Scotland against the Scottish government’s award of consent for the scheme has tied up the project in the Scottish courts, and meant it was not able to achieve financial close by 26 March. The UK government’s Low Carbon Contracts Company (LCCC) has said that it is withdrawing Contracts for Difference (CfD) subsidy support for the scheme.
If CfD support is not available then the impact on Neart na Gaoithe could be fatal, but we are not there yet. Mainstream has said it “strongly disputes the validity” of the LCCC decision. And the LCCC is not obliged to cancel a CfD if the developer does not reach financial close on time, though it has the right to do so. This means there is hope.
But this should not come down to hope: it is a ridiculous situation to be in. The judicial review was heard in Edinburgh’s Court of Session a year ago, but judge Lord Stewart has still not ruled. It is a huge delay for a £2bn project with a fixed deadline.
Then there is the LCCC’s decision. We accept that LCCC is working within the letter of the law, but that does not mean it is working in its spirit. The government has agreed to support Neart na Gaoithe as it sees backing offshore wind as a way to help the UK meet its energy goals and support industry. The LCCC has the discretion to wait for a decision from Lord Stewart before pulling the plug on funding. That is exactly what we think it should do.
The UK government must take a share of the blame, too. It has said that the decision to cancel the CfD was LCCC’s alone, but it could step in if it wanted to. It hasn’t.
The upshot of all of this is that it sends a negative message to those investing in offshore wind projects in UK waters. Yes, the UK gives subsidy support, but it will also take it back quickly if a developer has missed financial close for no fault of its own. That lack of leeway will surely put off some companies from investing time and money in this market.
Mainstream is holding out for common sense to prevail. But with an anti-renewables government, it could be waiting some time.
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