Trump blows a hole in Ed Miliband’s wind farm plan

The UK Government has been left scrambling to save its clean energy plans after developers pulled out of a major offshore wind project, with Government insiders blaming Donald Trump’s attack on green energy.

The Danish energy company Orsted has pulled out of the Hornsea 4 project, which was due to be one of the UK’s largest offshore wind projects.

With capacity to power over one million homes, the scheme about 42 miles off the coast of Yorkshire in the North Sea formed a major part of Labour’s clean power by 2030 target.

Orsted said the project was no longer economically viable, blaming rising supply chain costs and higher interest rates.

However, Government insiders said Orsted’s decision came after Trump cancelled a major offshore wind scheme off the coast of New York halfway through its construction.

Last month the US President stunned the offshore wind industry by halting construction of the project by Norway’s state energy company, Equinor, which has a 10 per cent stake in Orsted.

Orsted’s shares slumped nearly 10 per cent in the immediate aftermath of the decision. The firm has also said its US projects are being threatened by Trump’s tariffs.

The move is understood to have forced the world’s largest offshore wind developer to rethink its portfolio, leading it to cancel its plans for Hornsea.

Serious questions to answer

One Whitehall insider told The i Paper there are “obviously serious questions for Orsted to answer here, given only eight months ago they bid for this project”.

Referencing the impact of the Trump administration’s decision to pivot away from offshore wind, the source added that there are specific challenges for Orsted “which has spread itself very thin recently”.

Government sources insisted that the decision would not derail Energy Secretary Ed Miliband’s plans to deliver a near net zero energy grid by 2030, stating that the Government has enough projects in the pipeline to reach the 43GW of offshore energy production needed to meet the target.

However, Adam Berman, director of policy and advocacy at Energy UK, whose members include Orsted, said there was “going to be a hell of a lot of capacity to make up for” if the Hornsea project did not go ahead.

“When it comes to offshore wind you can’t just magic up a project. Projects often take 10-13 years from the inception of the project right through to it producing its first electrons,” he said.

According to Berman, options on the table now include Orsted altering the project in some way, selling it onto another developer or agreeing a new price with the Government.

In any scenario, he said he would “imagine a minimum of a two-to-three year delay”. Orsted had previously said it aimed to begin producing electricity at the site by 2030, meaning such a delay would push the project beyond Labour’s clean energy deadline.

Dr Simon Cran-McGreehin, head of analysis at the Energy and Climate Intelligence Unit, told The i Paper he was “fairly confident this project will go ahead”.

“The Government has various levers that it can pull to try and help this project and I’m certain there will be very intense negotiations going on in the background today between the Government and the company,” he said.

Concerns over electricity prices

One of the biggest levers at the Government’s disposal is the price it pays for the electricity from offshore wind farms.

Last year the Government agreed a deal with Orsted that would see it agree to purchase electricity from the site at a set price for 15 years.

“Each of these contracts has a price that guarantees the price the company receives when it generates electricity. It is genuinely the case that inflation is pushing costs up higher than the price and that’s something the Government could negotiate with the companies,” he said.

Ministers pay for these contracts through a levy on customer energy bills.

Cancellation of the scheme is likely to raise fears over the impact on jobs and energy prices, however. The Government has hailed the switch to clean energy as a means to become less reliant on the volatility of oil and gas, as well as proving a green jobs bonanza. It has also pledged to bring energy prices down by £300 per household by 2030.

Offshore wind farms provide jobs not just in construction but also in continued servicing and repair, as well as transportation to the sites.

The Government denied, however, that the cancellation of Hornsea would affect bills, arguing the scheme would ultimately go ahead.

Dr Cran-McGreehin said any impact on bills from a renegotiation on price would be “really small”, adding that as it stands the project was costing households around £1-£2 per year on their energy bills.