Ocean Winds is to terminate the ScotWind lease option for the 500MW Arven South project off the Shetlands.
The move is driven by doubts about the viability of delivering the wind farm during the option lease agreement, according to accounts published by Ocean Winds UK.
The Engie-EDPR joint venture cited “the lack of a viable grid connection for Arven South” and “no foreseeable alternative route to market”.
Ocean Winds also blamed “the current impact of the current Transmission Charging Regime on a business case of project located in the North of Scotland”.
“The decision has also been influenced by discussions with various local stakeholders specifically the fisheries-related interests at the proposed site,” accounts stated.
Ocean Winds is meanwhile pressing ahead with the larger 1.8GW Arven North complex, also off the Shetlands.
Arven project director Mark Baxter confirmed the option to lease is in the process of being returned to Crown Estate Scotland “subject to their approval”.
“The decision reflects the limitations of the available route to market options, and challenges in the offshore wind market, not least transmission charging signals which significantly constrain investment in our Scottish projects,” he said.
“We’re planning to develop the remaining Arven site (1800MW) incrementally, as floating offshore wind technology matures, via the principal route to market offered by, a commercially firm, Shetland 2 HVDC (1800MW) link.”
Baxter added that local and national fishing industry representatives made strong and consistent requests for consolidation away from the Arven South site.
“We remain expectant that Arven can become an important part of the Shetland community, supporting the growth of the local economy and the wider roll-out of floating offshore wind technology; delivering transformational jobs, skills, supply chain, and port development opportunities; and play a substantial part in Shetland, Scotland and the UK’s energy transition.”
Arven South was being developed in consortium with Mainstream.
However, Mainstream has been involved in “very limited decision-making” on the project since 31 July last year under a shareholder agreement, according to the accounts.
Arven South is the second option lease agreement to be terminated from ScotWind after Shell handed back the 2GW CampionWind site off east Scotland last year.
A Crown Estate Scotland spokesperson confirmed it has received an application for permission to terminate development of Arven South.
“The Arven South option to lease was agreed with Ocean Winds in 2022 and has an intended installed capacity of 500MW. The application relates only to the Arven South project,” they said.
“Crown Estate Scotland will process Arven South Ltd’s application and respond in due course.”