Orsted has warned that plans to build its 2800MW Hornsea 3 wind farm are “at risk” unless the government offers tax breaks to offset soaring costs.
The Danish developer is seeking government intervention to help with supply chain costs and interest rates which have increased dramatically since the wind farm was awarded a contracts for difference last year.
Orsted has called on the government to introduce tax breaks for offshore wind developers as part of this month’s budget announcement to ensure that the project remains viable.
Orsted head of UK and Ireland Duncan Clark (pictured) said in an interview with the Times that if Whitehall does not provide support by the end of April this year Hornsea 3 “would have to go on hold” and the developer would “cancel reservations with companies in its supply chain”.
He added Orsted would be forced to hand back Hornsea Three’s contract for difference, which will be taken away early next year if the project does not go ahead.
Clark said: “The upcoming Spring Budget offers a unique opportunity for the UK to take decisive action to maintain its leadership position in renewable energy and maximise the economic benefits for the UK.”
“In the midst of intense global competition for investment, skills and supply chain resources, we are in a position where nationally significant projects like our proposed Hornsea 3 offshore wind farm are at risk unless the government takes significant action to maintain the attractiveness of the investment environment.
“The AR4 contracts are excellent value for society, providing electricity at a price that is less than a quarter to a half of average wholesale prices over the last two years.
“However, since the auction there has been an extraordinary combination of increased interest rates and supply chain prices.
“Industry is doing everything it can to manage costs on these projects but there is a real and growing risk of them being put on hold or even handing back their CfDs, with repercussions that could impact across the economy as reserved capacity with supply chain businesses goes unfulfilled.
“This is why the sector is asking the Government for targeted support to ensure the UK remains an attractive destination for investors.
“It would send a powerful message if Government would consider a more suitable capital allowances regime, as it has for the oil and gas sector, which acknowledges the significant upfront investment required for these projects and enables us to recycle capital more effectively.”