German energy company EnBW has announced a huge €1.2 billion ($1.4 billion) impairment after pulling out of two major offshore wind projects in the UK. The projects, called Mona and Morgan, could have produced up to 3 gigawatts of power but failed to win government support in the latest Contracts for Difference (CfD) auction, the UK’s price guarantee scheme for renewable power. EnBW says this accounting loss won’t affect its cash flow.
The wind farms were being developed with JERA Nex bp, a joint venture owned by Japan’s JERA and British oil giant BP. Back in 2021, EnBW and BP won the rights to the two sites in what analysts described as a highly competitive bidding round. Each partner was expected to pay nearly £1 billion ($1.3 billion) in fees before construction, split over four yearly payments. EnBW has already paid £840 million in total and says it will not make any more payments.
The company says it’s exiting due to several problems: supply chain costs have jumped, electricity prices have fallen, interest rates are high, and there are other risks linked to building the projects. Even after the withdrawal, EnBW says its financial forecast for 2025 remains unchanged.
Meanwhile, JERA Nex bp is not ready to give up. The joint venture says it still sees possible ways to move forward with its UK offshore projects and is considering continuing Mona and Morgan without EnBW. The split between the partners highlights how tough the UK offshore wind market has become, with costs, rules, and market conditions all changing since 2021.
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