Centrica, a huge UK power producer, is not backing out of commitments to build offshore wind farms. But it IS warning the government costs might come in high, compromising returns.

Demand and inflation are driving the price of structural materials like steel and copper up.

Royal Dutch Shell recently withdrew from the 1000-megawatt London Array project of the coast of Kent, citing “marginal” economics. It is the same description Centrica Director Sarwjit Sambhi used to describe Centrica’s Race Banks, Docking Shoal and Links offshore projects in the planning stages.

The London Array cost was estimated in 2003 at £1bn but is now expected to cost £2bn.

Shell left E.ON without a partner and made the entire British wind industry uneasy. Only one turbine supplier has made an offer to take Shell’s place. Centrica is innovatively turning to investment institutions instead of energy companies for partners but has not been successful.

Dieter Helm, Professor of Energy Policy, Oxford University: “Investors are saying that the current policy for wind energy in the UK is not fit for purpose…Unless the government wants to revamp and rebase its wind structure, it isn’t going to get what it wants from wind…”

Both the British Wind Energy Association and the Brown government are far more sanguine, expecting the projects to get financed and the nation’s goals for wind to be met. Incentives are in place to attract financing. Britain will this year overtake Denmark and become Europe’s biggest wind power generator. The size of Britsh wind’s growth is a blessing and a curse but most of all it is a fact, a success that has its own momentum and inevitability.