Shell, E.ON Stall Offshore Wind Projects EU Needs

Equipment shortages and rising costs are stalling as much as $120 billion of offshore projects the European Union and other governments are counting on to reduce the use of fossil fuels and combat global warming. Royal Dutch Shell Plc on May 1 said it planned to sell its 33 percent stake in the London Array, the world’s biggest sea-based wind park.

“It’s been more difficult to build offshore projects than everyone thought,” said Goeran Lundgren, head of Nordic power generation at Stockholm-based Vattenfall AB, which has put a 640- megawatt wind farm in the Baltic Sea on hold. “I don’t think we’ll see any large-scale offshore parks until we’ve taken a few big development steps.”
London Array, proposed by Shell, E.ON and Dong Energy A/S in 2001, would be a collection of as many as 341 turbines 12 miles off the southeast coast of Britain. It would generate 1,000 megawatts of power, enough to supply a quarter of London’s homes.

“Rising costs of materials,” including steel and turbines “are the reasons for reassessment of our position,” said Shell spokeswoman Eurwen Thomas.

The price of offshore turbines rose 48 percent to 2.23 million euros ($3.45 million) per megawatt in the past three years, according to BTM Consult APS, a Danish wind power consultant. By comparison, land-based rotors cost 1.38 million euros per megawatt after rising 74 percent in the same period.

Bloomberg