* Energy policy uncertainty threatens investment -
* Project would have built world's biggest wind farm
* Could have powered up to 900,000 British households
By Kate Holton
LONDON, Nov 26 Germany's RWE has
scrapped plans to build the world's largest offshore wind farm
in British waters only a month after warning that political
wrangling over green energy was endangering billions of pounds
RWE's nPower said that the Atlantic Array project off
southwest England, which would have featured up to 240 wind
turbines and powered as many as 900,000 British homes, no longer
made economic sense in current market conditions.
The cost of the project has been estimated at as much as 4
billion pounds ($6.5 billion).
The decision to abandon the Atlantic Array follows Prime
Minister David Cameron's promise to cut some green levies,
stoking speculation that the world's sixth-largest economy may
change how it funds renewable energy and prompting environmental
groups to question Britain's green credentials.
"It really doesn't help when you're a political football,"
Gordon Edge, director of policy for trade association
RenewableUK, said of the growing debate around energy and
environmental costs in the run up to the 2015 election.
"Until quite recently there was political consensus ... but
there's been a growing drumbeat about the size of the bills.
There's been a febrile atmosphere, and that's really not
Britain's biggest energy companies have come under intense
scrutiny since the leader of the opposition Labour Party, Ed
Miliband, sought to address soaring household energy bills by
pledging to cap prices if he is elected in 2015.
Cameron, who once promised to form the greenest government
ever, called the plan a gimmick but pledged to remove so-called
green taxes and social levies that contribute nearly 10 percent
to domestic energy bills.
The Prime Minister told advisers recently that the
government should get "rid of all the green crap", British media
reported, citing a senior Conservative Party source. Downing
Street said it did not recognise the phrase but stopped short of
Paul Coffey, chief operating officer at RWE's renewable
energy division Innogy, had been quoted by the Guardian
newspaper in October as saying he could not invest on promises
and blaming the political row over energy for the uncertainty
that had descended on the sector.
"The next six months are critical," he said, "but
politicians are treating the issue as a political football to
beat up the utility companies."
RWE's nPower - along with British Gas, ScottishPower
, E.ON, EDF Energy and SSE -
is one of the big six companies that dominate Britain's energy
British energy regulator Ofgem says the Big Six, which have
blamed rising gas and electricity bills on green levies,
wholesale energy prices and the cost of using the national grid,
made a profit of 53 pounds per household customer last year, up
from 30 pounds in 2011.
Though the political landscape for renewables has become
increasingly uncertain, a spokeswoman for RWE said the company's
decision on the Atlantic Array was based on technical factors,
including the deep waters and adverse seabed conditions.
Offshore wind parks have a relatively high risk profile
compared with onshore sites because turbines installed in open
water need to withstand more extreme weather conditions.
However, they have drawn slightly less criticism than land-based
installations that many Britons consider unsightly.
RWE is also in the process of a major restructuring that has
resulted in 13,000 job losses, or about 18 percent of its
workforce, since 2011.
Renewable energy accounted for 15.5 percent of British
electricity generation in the second quarter of this year and
the government said it remained on track to meet its target of
30 percent by 2020.
The 15.5 percent represents 19.5 gigawatts (GW) of power.
The Atlantic Array would have added a further 1.2 GW.
Ben Warren, of consultancy firm EY, said the uncertainty
around the renewables sector had already prompted developers to
invest in other countries or to push back investment decisions.
"If this trend continues, it could jeopardise billions worth
of investment and thousands of much-needed jobs," he said.
Prime Minister Cameron's spokesman did not comment directly
on RWE's decision, but played down concerns over investment in
Britain's green energy sector.
"You've seen 29 billion pounds of private sector investment
in renewable energy since 2010," he said. "The UK is a world
leader in offshore wind power. You are seeing a very significant
and sustained investment