Page last updated at 12:49 GMT, Thursday, 1 May 2008 13:49 UK

Shell pulls out of big wind farm

Wind turbines in Liverpool Bay
Shell has 33% stake in the project

A plan to build the world's largest wind farm in the Thames Estuary looks uncertain after Shell said it wants to pull out of the project.

Shell wants to sell its stake in the London Array scheme and said it planned to focus on wind power in the US.

It said that US government incentives offered Shell "competitive returns".

Shell was one of three shareholders in London Array, which was to generate 1,000 megawatts - enough to power a quarter of London's homes.

Shell had an equal share in the project with power firm E.On and Denmark's Dong energy.

'High and dry'

Environmental group Friends of the Earth said that Shell's decision to pull out left "a key clean energy project high and dry".

Map

"Shell announced a 12% profit rise to 3.92bn," the group's energy campaigner Nick Rau said

"It should be investing those profits in renewable energy projects, not focusing its efforts on making money from sucking fossil fuels out of the ground and contributing to climate change."

Environment Secretary Hilary Benn questioned Shell's decision to sell the stake.

"And I think a lot of people would want to understand why, especially in a week in which the company has announced record profits."

Shell suggested its decision was based on economics and said it was still committed to wind power.

"We constantly review our projects and investment choices in all of our businesses, focusing on capital discipline and efficiency," Shell said.

The Financial Times said the cost of the project had increased from 1bn in 2003 to at least 2bn today as the price of turbine components had increased.

Disappointment

The chief executive of E.On UK, Paul Golby, said he was disappointed by Shell's decision.

"While we remain committed to the scheme, Shell has introduced a new element of risk into the project which will need to be assessed."

"The current economics of the project are marginal at best - with rising steel prices, bottlenecks in turbine supply and competition from the rest of the world all moving against us."

Friends of the Earth said the government should encourage the manufacturing of turbines in the UK.


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