Wind consortium gives London Array go-ahead

After months of speculation that it could ditch plans to build the world's largest offshore wind farm, the consortium behind London Array has today confirmed they are to begin work on the first phase of the project.

E.ON, Dong Energy and Masdar announced this afternoon that they are to invest €2.2bn in building the first 630MW phase of the offshore wind farm in the Thames Estuary.

The coalition had launched a review of the high-profile projects' financial viability after the falling value of the pound led to an increase in the cost of wind turbines imported to the UK. The increased costs sparked fears that the plans had become "economically marginal" and prompted warnings from the wind energy industry that the government's promised expansion of offshore wind capacity could face long-term delays.

However, London Array consortium said today that the government's commitment last month to increase the financial support offered to offshore wind farms by £525m over the next two years meant it was now satisfied the project remains " financially viable".

The chancellor announced in the Budget that the government intended to increase the number of Renewable Obligation Certificates (ROCs) available to offshore wind farm operators, from 1.5 per megawatt hour to two per megawatt hour for the financial year 2009-2010. The subsidy will then fall back to 1.75 ROCs per megawatt hour for 2010-2011 before being restored to the 1.5 ROC level from 2011-2012.

E.ON chief executive Dr Wulf Bernotat said the pioneering project, which is ultimately expected to provide one gigawatt of power and result in 1.9m tonnes of avoided CO2 emissions, marked "a key milestone" in the company’s plans to take renewable energy to an "industrial level".

"Today's announcement is proof that, if all interested parties work together, renewable power can be taken to its next level and so make a real difference to the fight against climate change," he added.

Energy and climate change secretary Ed Miliband hailed the decision as "a vote of confidence in the support the government has put into backing renewable energy".

"The UK is already the world's leading offshore wind power and this multibillion-pound project will help keep us there, cut our carbon emissions and contribute to secure energy supplies," he added.

The move was welcomed by Friends of the Earth, which called on the government to accelerate plans to deploy more offshore wind farms and invest in new grid capabilities to ensure they can transmit energy to the mainland.

"Ministers must ensure that more projects like this are developed so that Britain reaps the huge employment, business and environmental benefits of clean, green energy," said Friends of the Earth executive director Andy Atkins. "This must include a new super grid to ensure we get maximum benefit from offshore energy, and greater efforts to make sure that turbines are built in Britain - not imported from abroad."