Offshore wind giant Orsted remains committed to delivering its next huge wind farm off the Humber, despite expressing disappointment at a lack of support in the Budget.
Soaring prices fuelled by energy costs and other inflationary measures brought about by the invasion of Ukraine have put huge pressure on the ability to deliver at the record low price Hornsea Three was secured at, having been proposed before the Russian offensive.
Ahead of the Budget, the Danish giant’s UK head, Duncan Clark, warned the 2.8GW farm could even be put on hold. An increase in capital allowances lasting three years has been described by the industry as a measure not bold enough. Much of the Net Zero pump-priming was focused on industrial emission abatement through carbon capture and new nuclear.
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Hornsea Three, double the size of the leading wind farm in a cluster supported by 540 employees in Grimsby, was awarded a new low subsidy price of £37.35 last summer.
Mr Clark said: “It is disappointing that the Government has not put in place a full package of support for the renewables industry in the Spring Budget. Under the Government’s proposals, we understand long-life infrastructure projects such as offshore wind farms would only qualify for a 50 per cent capital allowance for three years. Furthermore, the lion’s share of capital expenditure on Hornsea Three and other forthcoming offshore wind projects will come outside the qualifying scope and timeframe.
“We will now need to take some time to analyse the anticipated impact of these proposals on our future projects. We remain committed to doing all we can to reach final investment decision on Hornsea Three, a project Orsted has been developing for more than a decade. Our project team, together with our supply chain partners, will continue to seek creative solutions that we hope will allow us to green-light Hornsea Three in the future, realising an £8 billion investment in the UK with thousands of jobs during construction and billions invested in the UK supply chain.”
The company has already invested almost £10 billion in the Humber region alone, and a decision had been thought to be imminent. Only last month the company announced record earnings of £3.8 billion, with a third of that figure generated from the sale of significant stakes in completed farms, including Hornsea Two.
“In the next decade, it is the rapid build-out of renewable energy that will enable us to become independent of gas and other fossil fuels and to ensure security of supply for the UK,” Mr Clark added. “The offshore wind sector has delivered huge growth in the UK over the last decade but it has arrived at an inflection point. It will require continued focus from stakeholders in government and across industry to ensure offshore wind delivers on its potential to become the backbone of the UK’s energy system and bring billions of pounds of investment, provide low-cost electricity for consumers and help deliver our net zero target.”
Trade body RenewableUK welcomed investment zones to help expand supply chains, a key element in the imminent Humber Freeport, but said it didn’t match the ”comprehensive industrial strategy” required.
Stating the framework needed to mobilise investment to make the UK a clean energy superpower hadn’t been delivered this week, executive director of policy and engagement Ana Musat said: “Overall we need a much bigger response to match the incentives being offered to renewable energy developers by the US and the EU – this wasn’t forthcoming, and we hope the Chancellor’s announcements later this month on the UK’s pathway to net zero and energy security will remove the key fiscal and non-fiscal barriers to the growth of the renewables sector”.
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