The Crown Estate, which manages property in the UK, has picked 10 projects today for offshore wind development in Scotland, paving the way for up to 6 gigawatts of renewable power for the UK grid. But the nine companies and organizations involved in the projects, including E.ON, Airtricity, and Scottish Power, still have some hurdles to get over before any deals are final.
The Crown Estate controls the rights to lease the seabed around the UK for renewable energy projects, but has so far only awarded so-called exclusivity agreements for the projects. The Scottish government still has to look at the environmental impact of the proposed wind farms, and the exclusivity agreements allow the developers to start their initial surveys and consultations in meantime. The Crown Estate can only award leases for the sites once the Strategic Environmental Assessment is complete, and that’s not expected until January 2010.
The biggest project is from Scottish Power, part of Spain’s Iberdrola. The Argyll Array, sited west of Argyll and the island of Tiree, could produce 1.5 GW, with the turbines spread over a 224 square mile area.
Financing for the projects could be another hurdle, given the shaky state of the global economy and, more specifically, the shaky state of some wind power companies. Earlier this month, Clipper Windpower said it would cut wind turbine production by 15 to 20 percent this year, and the company has already laid off 90 workers at its Iowa plant. Turbine makers Gamesa and DMI Industries have also announced layoffs this year, and even Vestas Wind Systems, the top dog in the industry, is hurting, with CEO Ditlev Engel telling the Guardian last month that the global downturn is cutting demand for Vestas’ products.
Some big investors have already pulled out of the wind market entirely in the UK, including Royal Dutch Shell (s RDS.A) and BP (s BP). After dropping out of the big London Array offshore wind project last May, Shell said in December that it planned to focus its future wind investments on projects in North America, following in the footsteps of BP, which made the same move in November.