A £2bn wind farm spearheaded by an Irish firm is on the verge of being scrapped

THE FATE OF a huge £2 billion wind farm an Irish company is developing off the coast of Scotland hangs by a thread as it faces losing a crucial government subsidy.

The project, Neart Na Gaoithe, would include up to 125 turbines across an area of about 100 sq km, making it one of the largest offshore wind projects in the UK.

The 450 megawatt farm was to be built off the coast of eastern Scotland and could have supplied enough energy to power about 325,000 homes.

The project, which has been forecast to cost £2 billion to build, is being spearheaded by Dublin-based Mainstream Renewable Energy. The company was aiming to take the project to a construction-ready stage before selling it on.

However, the future of the development is now in doubt after the UK’s Low Carbon Contracts Company (LCCC) notified Mainstream that it was terminating a crucial subsidy called a contracts for difference (CfD), which the Dublin company has said is needed to make the project viable.

Mainstream, headed up by Airtricity founder Eddie O’Connor, is disputing the termination notice.

Mainstream Renewables CEO Eddie O'Connor

Subsidies

CfDs are a form of subsidy under which the government guarantees to pay a set price for each unit of electricity produced by a form of renewable energy. Mainstream had a guaranteed price of £114 per megawatt hour for its electricity, one of the lowest subsidies awarded by the UK government for offshore wind.

The developer had also lined up a group of investors, led by Scottish-based energy company InterGen, willing to finance the project.

However, the CfD required that a set amount, believed to be between £100 million and £200 million, be spent on the project by 26 March, which was not done. Mainstream said that the target was unable to be met because the development is currently the subject of a judicial review.

The Royal Society for the Protection of Birds lodged a challenge to the construction of the 646 metre-tall turbines last year, which have already received planning permission from the Scottish government.

The society claimed that Neart Na Gaoithe and three other wind farms recently approved in Scotland pose “too great a risk to the many thousands of resident and migratory seabirds”.

Dispute

Although the judge hearing the case has yet to make a final decision, Mainstream said work was unable to proceed during the review.

The Irish company appealed to the LCCC to extend the deadline for the milestone spending, however in a notice published on its website the LCCC said that the subsidy had been terminated.

A spokesman for Mainstream told Fora: “On 29 March 2016, LCCC issued a notice which, in its view, terminated the project’s CfD.”

He said that Mainstream “strongly disputes the validity of the termination notice” and added that the company “continues to work hard to ensure that this £2 billion, significant energy infrastructure project will be built as planned”.

The spokesman said that the company is “currently in arbitration with the LCCC over the terms of its CfD contract” and confirmed that the project is unviable without the subsidy.

The LCCC said that it does not comment on individual cases.