Sweden’s Vattenfall may still hold on to a UK wind project that it shelved over the summer, as talks continue with the government to improve conditions for developers.
Keeping the 1.4-gigawatt Norfolk Boreas project and bidding in a future renewable energy auction remain an option for the state-owned utility, Chief Financial Officer Kerstin Ahlfont said in an interview Thursday.
Across Europe, wind developers are dealing with a raft of challenges including higher costs for turbines, supply-chain bottlenecks and international competition, while facing difficulty securing financing for new projects.
In Britain, the situation has been compounded by an auction system that hasn’t guaranteed adequate return on investment, threatening to bring new offshore construction to a halt.
The next round of auctions — the sixth — for so-called contracts for difference, or CFDs, is coming up next year.
“The government is understanding that these cost-development issues are an industry-wide thing and the incentive schemes need to reflect this market environment in order to get projects built,” Ahlfont said.
“The CFD levels have not been high enough to match that and to make projects profitable. We are in close dialog with the government in the UK and also in other markets.”
Vattenfall’s project off England’s east coast, which could provide power for 1.5 million UK homes, has faced concerns about its profitability. The company took an impairment of 5.5 billion Swedish krona ($491 million) during the second-quarter because of the decision to halt it.
Bloomberg reported last month that the firm is also in early talks with possible buyers for the project. Ahlfont declined to comment further, but said that a sale of the project also remains an option.