Vattenfall pulls out of Norfolk Boreas wind farm due to soaring costs

Swedish energy giant Vattenfall has announced that it will stop the development of the Norfolk Boreas wind farm off the Norfolk coast in the UK.

In the company's second quarter financial report, Vattenfall cited challenging market conditions as the reason for the decision.

They state that the offshore wind industry has seen cost increases up to 40% which "in combination with increased cost of
capital puts significant pressure on all new offshore wind projects."

Have you read?
Hesitancy and hope: Ireland’s offshore wind journey so far
PGE and Ørsted ink contracts for stage one of Baltica Offshore Wind Farm

Boreas is not the only project in the pipeline for the Norfolk zone. Vattenfall will also be reviewing the viability of the planned Vanguard East and Vanguard West projects.

According to Anna Borg, president and CEO of Vattenfall: "The market for offshore wind power is challenging. Higher inflation and capital costs are affecting the entire energy sector, but the geopolitical situation has made offshore wind and its supply chain particularly vulnerable."

Added Borg: "We have attractive wind power projects in the pipeline, and investment decisions will always be based on profitability."

According to Vattenfall's financial report, the move will cost the firm 5.5bn Swedish krona ($534 million) on its earnings, however, a final investment decision will not be taken now.

The 1.8GW project won a contract-for-difference (CfD) in an auction in 2022, which effectively guaranteed prices for energy suppliers for 15 years.

However, soaring project costs, inflation and interest rates have meant the price guarantee offered then has made the project uneconomic.

This will be a blow to the UK government's goal to triple offshore wind capacity by 2030, from about 14GW to 50GW and could put additional pressure on upcoming contract auctions.