Swedish utility Vattenfall (VATN.UL) is stopping the development of the 1.4 gigawatt (GW) Norfolk Boreas offshore wind project off the coast of Britain, designed to power around 1.5 million homes, it said in an earnings statement on Thursday.
The company said the decision would have an impact on earnings of 5.5 billion Swedish crowns ($537 million).
The project won a contract-for-difference (CfD) in an auction last year, guaranteeing a minimum price of 37.35 pounds per megawatt hour (MWh) in 2012 prices for the electricity produced, which equates to around 45 pounds/MWh today.
Since the auction, called round 4, some developers have warned that soaring project costs, inflation and interest rates have meant the price guarantee offered then could leave the projects uneconomic and called for targeted help for the sector.
Vattenfall also said it would examine the best way forward for the entire Norfolk zone which also includes the Vanguard East and West projects.
Combined, the three projects were expected to produce some 4.2 GW of electricity.
Britain has a target of increasing offshore wind capacity to 50 GW, from around 14 GW now, as a part of efforts to meet its climate targets and boost energy security.
($1 = 10.2438 Swedish crowns)
