Blog Post

Shell Pulls Out of UK Wind, Again

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

First it was the London Array; now its the UK’s Cirrus Array that’s getting the cold shoulder from Royal Dutch Shell (s RDS.A), dealing the latest blow to the UK wind market. Netherlands-based Shell confirmed with the Sunday Times that the planned 270-megawatt Cirrus Array offshore wind project has been dropped by a consortium made up of Shell, the UK’s Scottish Power and Denmark’s Dong Energy.

According to the Times, the consortium had previously denied that the project was dead but said this weekend that it was unable to overcome objections to the £800 million ($1.03 billion) offshore wind farm after five years of work and millions of pounds of investment. At the top of the list were complaints from the UK’s Ministry of Defence over potential radar interference from the turbines. As a result, the consortium has withdrawn its application for permission to develop the project, killing plans for the offshore wind farm.

Shell told the Times that it instead it planned to focus its future wind investments on projects in North America, following in the footsteps of London’s BP (s BP), which said last month that it was pulling out of wind developments in the UK, China, India and Turkey to put cash into the more favorable U.S. onshore market.

Back in May, Shell announced that it would pull out of the London Array, a 1,000 MW offshore wind farm that’s expected to be the largest in the world when it’s built. Shell was supporting that project along with Germany’s E.On and Dong Energy. Abu Dhabi’s Masdar Initiative has since stepped in, taking a 20 percent stake in the London Array.

The Cirrus Array, previously known as the Shell Flat Offshore Wind Farm, would have been located in the Irish Sea off the northwest coast of England, but it had been beset by objections from environmental groups English Nature and the Royal Society for the Protection of Birds, and, most significantly, the Ministry of Defence.

The Cirrus Array consortium had managed to reach an agreement with English Nature — now known as Natural England — and the Royal Society for the Protection of Birds over concerns about birds in 2005 with a relocation of the wind farm site. But it was planes, not birds, that eventually killed the project.

According to the Times, the consortium blamed the failure of the project on continued complaints from the Ministry of Defence over potential radar interference from the turbines. On the consortium’s web site, the group said “it has not been possible to resolve underlying concerns about aviation.”

The UK has an ambitious goal to supply a third of its electricity from wind by 2020, but an investigation by the Observer in October said that goal could be on shaky ground. And that investigation was done before Shell and BP revealed their plans to shift their wind investments to North America. The Observer cited a potentially overwhelming number of obstacles, including the rising costs of offshore wind farms, bureaucratic bottlenecks and a lack of grid infrastructure.

But it’s not all bad news for the UK. Last month, Sweden’s Vattenfall announced plans to invest big in UK wind. The electric utility acquired the planned 300 MW Thanet Offshore Wind project for £35 million, which is expected to be operational by the end of 2009, and also teamed up with Scottish Power to make joint bids on a third round of offshore wind farm development in the UK. Vattenfall said it plans to build 6,000 MW of wind power in the country.