Development of UK's Sanquhar II wind farm stalls as costs soar

UK-based wind energy developer Community Windpower has announced that progress has stalled on the Sanquhar II Wind Farm, known as SQII.

The highly anticipated 308MW SQII, featuring 44 turbines, was on track to become the UK's fourth-largest onshore wind project, with construction scheduled to begin next year.

However, progress has halted due to a variety of challenges, which have significantly increased infrastructure costs. SQII was anticipated to cost approximately £300 million ($365 million), however, costs have now surpassed the £500 million ($609 million) mark.

Said Rod Wood, managing director at Community Windpower, "We've run the financial models… We cannot get the return on capital that we need to cover the bank requirements for financing."

According to the Community Windpower statement, the increased costs have come as a result of three factors, including; extreme inflation, a fourfold surge in interest costs and a weakened pound.

There has also been the imposition of an unexpected Windfall Tax on new renewable power plants, compounding the situation.

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Community Windpower, along with representatives from the wind energy industry, are urging the UK Government to take action by:

1. Providing exemption for new projects from the Windfall Tax
2. Introducing investment allowances in line with oil & gas
3. Providing a sunset clause on Windfall Tax in line with Ireland/EU

Already in March this year, Wood was reported to have stressed the need for including an investment allowance like the one oil and gas companies receive under their equivalent Energy Profits Levy (EPL). He said that without tax changes, his company could be faced with halting development of three onshore Scottish projects totalling 1.2GW.

This is not the first instance of wind projects being impacted by soaring costs. In July this year, Swedish energy giant Vattenfall announced that it would stop the development of the Norfolk Boreas wind farm off the Norfolk coast in the UK. The company cited tough market conditions and high costs as the reasons for the decision.

And it's not only onshore wind projects feeling the pain. The UK’s Department for Energy Security and Net Zero's latest renewables auction results show no new contracts for offshore wind. Bidders like SSE and Vattenfall excluded themselves citing government failure to allow for sharp rises in the cost of steel and labour when setting the electricity price.

The UK has an ambitious target to increase offshore wind fivefold to 50GW by 2030.