Government plans to generate one third of Britain’s electricity from giant offshore wind parks by 2020 could be scrapped because of the vast costs involved, according to the head of Britain’s biggest utility company, as well as a key investor.
Sam Laidlaw, chief executive of Centrica, the owner of British Gas, said it was unclear whether the scheme to build an estimated 10,000 wind turbines across swaths of the North and Irish seas would ever go ahead.
He said that Centrica, which was awarded one of the nine so-called Round Three development zones last month, would proceed only “if the economic conditions are right”, citing high costs for turbines and other equipment as well as limited government financial support.
“To meet the Government’s targets, Round Three has to be largely built out … [but] it’s not a given that they will go ahead.”
The programme — which has the personal backing of Gordon Brown — is a cornerstone of the Government’s renewable energy policy.
Maria McCaffery, chief executive of the British Wind Energy Association (BWEA), said that wind farms would be essential if Britain was to have a chance of meeting its target of generating 30 per cent to 40 per cent of its electricity from renewable sources by 2020.
She said that building the wind farms would cost an estimated £100 billion and create 70,000 jobs in the UK.
Mr Laidlaw said that the economics of generating electricity from offshore wind turbines in deep water up to 200 miles offshore remained questionable. He said that greater competition was needed between turbine suppliers, while more Asian manufacturers would need to enter the market to drive down costs.
The Round Three development zone awarded last month to Centrica covers 2,200 square kilometres in the Irish Sea off the Anglesey coast and is one of nine such leases sold to developers by the Crown Estate, which owns the British seabed. If developed, the Centrica windfarm alone would be capable of generating 4.2 gigawatts of renewable energy — enough power for more than three million homes.
However, the cost of doing so could be as high as £14.7 billion, according to industry estimates.
If built, the total generating capacity of all the Round Three projects put together would be 40 gigawatts — more than half of current generating capacity from all of the UK’s power stations, wind farms and hydroelectric schemes.
However, Citigroup has estimated that the cost of installing one megawatt of offshore wind is about £3.5 million — roughly five times the cost of building a gas-fired power station with the same capacity.