(Reuters) - British energy supplier Centrica Plc (CNA.L) is likely to drop plans to build a 2 billion-pound wind farm because of insufficient government subsidies, the Telegraph reported on Sunday, citing three sources.
Centrica will not go ahead with the Race Bank wind farm project off the Norfolk coast unless proposed government subsidies are significantly increased, the sources told the newspaper. For the Telegraph's story, click on link.reuters.com/sak44v .
Offshore wind power is still in its infancy and its financing is a political issue because cash-strapped governments balk at the subsidies the industry says are necessary until economies of scale and streamlined processes can make it more competitive.
The subsidies will be funded by government-imposed levies including green taxes, which Britain’s “big six” energy suppliers, including Centrica, say are increasing energy bills for consumers.
Centrica, which owns British Gas, increased its household electricity and gas prices last month by an average of 9.2 percent, more than three times the rate of inflation, adding to a political row over the rising cost of living.
The Race Bank project will be the third big UK investment plan abandoned by Centrica.
The company called off two gas storage projects in September after the government refused to help build stockpiling sites. In February, it pulled out of plans to build new nuclear power stations in Britain with partner EDF (EDF.PA).
Centrica was not immediately available for comment.
Reporting by Abhirup Roy in Bangalore