World's largest windfarm gets green light

LONDON, ENGLAND - The world's largest planned offshore windfarm, the London Array, has been given the green light by key backers following a commitment by the UK government to offer better subsidies to investors.

Danish company DONG Energy, Germany's E.ON AG and the Abu Dhabi Future Energy Company, known as Masdar, have agreed to spend $3 billion to construct the first 630-megawatt (MW) phase of the London Array windfarm project in the Thames Estuary.

The scheme will be built about 12 miles off the coasts of Kent and Essex and, when complete, will be the first 1-gigawatt (GW) windfarm in the world. The first phase will involve installing 175 wind turbines that will generate 630 MW of power, capable of powering 750,000 homes. The wind farm is expected to displace the emission of 1.9 million metric tons of carbon dioxide every year. Up to 341 turbines will be installed over a four-year period on the 90-square-mile site. The turbines will range from 3 MW to 7 MW in capacity, depending on when they are installed, with hub heights ranging from 85 to 100 meters.

The decision by the UK government in its recent budget to increase the renewables obligation certificates (ROCs), for each megawatt of energy produced from one ROC per megawatt to two was vital to getting the project off the ground. ROCs are issued to green energy companies for every megawatt of clean energy they produce and are then traded to traditional fossil-fuel-based power producers who are required to purchase ROCs in line with the amount of carbon dioxide they emit. The average trading cost of ROCs last year was about $71.

Until the UK budget was issued three weeks ago, the key investors were not convinced that the massive investment needed to build the London Array farm would be worthwhile. Original investor Shell pulled out of the project dramatically last May, claiming it was going to shift its wind focus to the U.S., where the government offered better incentives.

"Following the two-ROC announcement, and our subsequent decision to build the Walney projects, I'm thrilled that we today also have the final investment decision on the London Array project," said Anders Eldrup, CEO of DONG Energy. "The decision to build the London Array offshore windfarm is a very significant cornerstone in DONG Energy's strategy to increase the proportion of electricity generated from renewable energy sources. DONG Energy has built approximately half of all offshore windfarms in operation in the world today."

E.ON CEO Dr. Wulf Bernotat said, "I'm delighted that work can now get under way on the world's largest offshore windfarm. The start of London Array will mark a key milestone in our roadmap as we continue with our ambitious strategy to take renewables to an industrial level. With this pioneering scheme, we see a significant increase in scale for offshore wind and also for E.ON as we aim to become the world's largest offshore wind farm developer."

According to UK Prime Minister Gordon Brown, "The London Array is a flagship project in our drive to cut emissions by 80% by 2050 and meet future energy needs. The UK is a world leader in offshore windfarms, creating jobs and prosperity for the economy. That's why we have increased our support for this technology as we move towards a low-carbon future."

Work on the onshore elements of the project will get under way this summer, while the first turbines are due for installation by 2011. Power production is slated to start in 2012.