Future Looks Cloudy for the London Array

It’s not a good sign when an oil-rich emirate questions the economic viability of a massive offshore wind farm that’s already lost an investor. Masdar, the Abu Dhabi-backed cleantech group, told Reuters today that it’s reviewing the feasability of the 1,000-megawatt London Array, the world’s largest planned offshore wind farm.

“The economics of this project should be revisited,” Ziad Tassabehji, head of innovation and investments at Masdar told Reuters. He said Masdar is working with its partners to take another look at the project.

Masdar came in as a savior of the London Array in October after Netherlands’ Royal Dutch Shell pulled out of the big wind farm earlier in 2008. Masdar holds a 20 percent stake, with Germany’s E.ON maintaining a 30 percent ownership and Denmark’s Dong Energy holding the remaining 50 percent.

Offshore wind, which can cost twice as much as onshore projects, has hit a number of bumps in the UK over the past year, and some have questioned whether the country can meet its goal of supplying a third of its electricity from wind power by 2020.

In November, London’s BP said it was moving its investments in wind to what it said was a more favorable U.S. onshore market, dropping plans for wind developments in the UK, China, India and Turkey. And last month, Shell  dealt another blow to the UK wind market, confirming that plans for the 270-MW Cirrus Array offshore wind project have been dropped by a consortium made up of Shell, the UK’s Scottish Power and Dong Energy.

But Sweden’s Vattenfall seems to have confidence in the sector, announcing in November that it acquired the 300-MW Thanet Offshore Wind project in the UK. Vattenfall also said it was teaming up with ScottishPower Renewables to build 6,000 MW of offshore wind power in the UK by 2020.

Masdar, which has been making some big investments in cleantech in its own backyard, could have the opportunity to put even more cash into its local market. The government of Abu Dhabi has made a commitment to get at least 7 percent of its energy from renewables by 2020, with Masdar estimating that the renewable target will create a cleantech market valued at $6-8 billion in the emirate.

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