United Kingdom

United Kingdom

Mainstream in dispute over CfD removal

UK: Mainstream Renewable Power has entered into arbitration with the Low Carbon Contracts Company (LCCC) in a dispute over its contract for difference (CfD) agreement for the 448MW Neart na Gaoithe offshore project.

Mainstream's Neart Na Gaoithe offshore project will be located off Scotland's east coast
Mainstream's Neart Na Gaoithe offshore project will be located off Scotland's east coast

The LCCC is responsible for managing the CfD process on behalf of the UK government.

Mainstream was awarded a 15-year support deal in the UK's first competitive CfD auction in February.

Each CfD has a series of project milestones developers must meet in order to receive government support.

However, development has been delayed due to a judicial review into the project's consent, brought by the Royal Society for the Protection of Birds (RSPB). The RSPB is concerned about the impact of the project on Scotland's bird wildlife. 

The review has taken longer than expected. As a result, Mainstream is set to miss some of the milestones in the CfD agreement.

Aware of this, Mainstream entered arbitration with the LCCC to extend the deadlines, however the LCCC later issued a notice that terminated the CfD deal. Mainstream rejects the notice from the LCCC as the developer was in arbitration.

In a statement, Mainstream said: "Neart na Gaoithe Offshore Wind Limited [NnG, the project development company] is currently in arbitration with the LCCC over the terms of its CfD contract for the Neart na Gaoithe offshore wind farm in the outer Firth of Forth, Scotland. NnG served notice of dispute under the CfD contract on 24 March 2016.

"On 29 March 2016, the LCCC issued a notice which, in its view, terminated the project's CfD. NnG strongly disputes the validity of the termination notice.

"All substantive elements of the project are in place, including the investment consortium, major contractors and the required £2 billion (€2.5 billion) of construction financing for the project. This project will make a major contribution to meeting government energy security and climate change targets at the lowest cost to consumers, and we look forward to bringing it to market."

The LCCC said it would not comment on individual projects.

Mainstream reached an agreement with a consortium, led by power company InterGen, to invest in the project to take it to a final investment decision.

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