4th Nov 2013 06:39
WINDSOR (Alliance News) - UK-based energy company Centrica PLC (CNA.L) is likely to abandon its plan for a 2 billion-pound offshore wind farm project due to insufficient government subsidies, the Telegraph reported Sunday, citing three sources.
Centrica had reportedly planned to invest up to 200 million pounds of the Race Bank project off the Norfolk coast, with remaining funding from its partners. The company had reportedly started talks with the government about terms of a subsidy deal earlier in 2013.
In June 2013, government unveiled the proposed levels of subsidiaries for offshore wind farms for the rest of the decade. However, Centrica believes the subsidiaries are too low.
According to the Telegraph report, Centrica will not build the Race Bank wind farm unless the government increases the proposed subsidies. However, ministers will not confirm final subsidy levels until December, even while they believe Centrica and its unnamed financial partner are demanding too high returns for the project.
If the project goes ahead, it could power 450,000 homes, according to Centrica. Subsidies for wind farms will be paid for through government-imposed levies on consumer energy bills, though companies like Centrica have blamed such green taxes for pushing up household energy bills. Centrica is the owner of British Gas.
In mid-October, Centrica announced an average increase of 9.2% in household energy prices - 8.4% on gas and 10.4% on electricity -from November 23, 2013.
The company said that the announcement, which will add about 2 pounds a week to the average dual fuel bill, reflects the increasing cost of buying energy in global markets, delivering gas and electricity to the home, as well as the government's social and environmental program that are paid for through customers' bills.
The Race Bank project will be Centrica's third high-profile withdrawal from its planned investments in the UK. In February, Centrica said it will not participate in the construction of up to four new European Pressurised Nuclear Reactors in the UK. Centrica added that its 20% share of the pre-development expenditure will be written off as an exceptional cost in its financial results.
In 2009, Centrica had acquired a 20% interest in EDF Energy's eight operational nuclear power stations in the UK and also took an option for a 20% interest in the construction of new nuclear power stations at Hinkley Point and Sizewell.
As part of the transaction, EDF Energy, of EDF Group SA (EDFEF.PK), and Centrica formed an 80/20 joint venture to undertake pre-development activities for a nuclear new build program, with the intention of constructing, operating and decommissioning four European Pressurised Nuclear Reactors.
Centrica also said in September 2013 that it will not proceed with its new-build gas storage project at Baird in the UK Southern North Sea and will put its project at Caythorpe in East Yorkshire on hold indefinitely, citing weak economics for storage projects as well as the announcement by the UK Government in early September ruling out intervention in the market to encourage additional gas storage capacity to be built.
CNA.L closed Friday's trading on the London Stock Exchange at 354.80 pence, down 3.50 pence or 0.98% on a volume of 9.85 million shares.
Copyright RTT News/dpa-AFX
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