The dramatic decision to halt work on a massive wind farm off the Norfolk coast has sparked fears the region will miss out on a huge economic boost.
Swedish energy giant Vattenfall is stopping work on Norfolk Boreas - a huge wind farm due to be built 50 miles off the county's coast.
The company said costs had soared by 40pc due to inflation, so it was pausing and reviewing the project, which got the go-ahead in 2021.
It places a huge question mark over whether East Anglia will reap the economic rewards of being a base for the renewable energy sector - and what happens to plans for pylons and trenches.
And it could put pressure on the government, with its carbon emission reduction targets, to make changes to support the offshore wind sector.
Bosses at Vattenfall insist they remain committed to Norfolk, but the decision has been branded as a "significant setback".
Anna Borg, Vattenfall president and chief executive, said the company had seen cost increases of up to 40pc amid inflation and supply chain issues caused by the war in Ukraine.
She said: "We have decided to stop the development of Norfolk Boreas in its current form and not take an investment decision now due to the mentioned factors.
"We will examine the best way forward for the entire Norfolk Zone, which in addition to Boreas also includes the Vanguard East and West projects."
The Boreas scheme would consist of between 90 and 156 turbines, up to 350 metres tall.
The cable route would travel almost 40 miles, from Happisburgh to an expanded substation at Necton. Work to start digging trenches to lay cables was due to begin later this year.
'WE ARE NOT GOING ANYWHERE'
Catrin Ellis Jones, Vattenfall's stakeholder and communications manager for the Norfolk projects, insisted the company remains committed to the region.
She said, despite the halt to Norfolk Boreas, attention would now shift to the company's other schemes off the county's coast - Vanguard East and West.
Dr Jones said: "We think the East of England is a fantastic place to do development. We have been working in the region for a long time, so we have reached out to a lot of people today to let them know what this means, but we are not going anywhere.
"We will be continuing to look at the zone as a whole, to assess the best way forward.
"The whole zone is about four gigawatts and it was always intended to be phased in its development.
"Norfolk Boreas was going to be phase one, but we are now going to shift to the Vanguard schemes, so that becomes phase one."
She said she could not yet say when that decision would be confirmed or what it would mean in terms of the timescale for construction.
Dr Jones insisted the decision was "not posturing" in an attempt to persuade the government to provide more support to the sector and that work to prepare the Necton substation for the connections to the cables would continue.
'A SIGNIFICANT SETBACK'
But the Opergy Group, a Norwich-based consultancy in clean energy said the decision was a "significant setback".
Johnathan Reynolds, the consultancy's managing director and Martin Dronfield, the group's commercial director and a member of trade body East of England Energy Group, said: "Vattenfall's decision, driven by rising costs, has created a significant setback for the development of offshore wind power in the Norfolk region, and the UK.
"The offshore wind industry has long been hailed as a driver of economic growth, providing a wealth of supply chain opportunities and supporting local communities.
"The cancellation of Norfolk Boreas deals a severe blow to the region's potential for job creation, stifling economic progress at a time when it is needed the most."
The pair said the government must take "immediate action" to address the issues plaguing the offshore wind sector.
WHAT WILL IT MEAN FOR PYLON PLANS?
The method of getting the power from the wind farms to the National Grid has also triggered controversy.
National Grid wants to build pylons stretching 112 miles from Dunston, just south of Norwich to Tilbury on the Thames Estuary, to carry the power to homes in London and the South East.
Vattenfall's decision will cast doubt on whether that will be needed in its proposed form, or if it could be scaled back.
And that will give fresh impetus to campaigners who say the cables should be under the sea, rather than across Norfolk's countryside.
WHAT THE POLITICIANS SAY
For much of the past decade, offshore wind farms have been promised a fixed price for the electricity they produce through a so-called contract for difference.
This means if electricity prices are below the promised price companies get a subsidy to make up the difference.
Equally, if prices rise above that level they have to pay back their additional gains.
When Vattenfall won the Norfolk Boreas contract it was at a joint record-low strike price of £37.35 per megawatt hour.
But since winning the auction, Vattenfall and others warned costs have increased far too fast for these projects to be economical.
In March, Denmark’s Orsted warned that it might pause the Norfolk Hornsea 3 project in the UK – expected to be the world’s largest wind farm when it opens – unless it gets help with surging costs.
Hornsea 3 has the same £37.35 per MWh strike price as Norfolk Boreas.
Waveney MP Peter Aldous, who raised issues around the renewables industry in Parliament last week, said the contracts of difference process needed to change.
He said: "There's clear feedback from the sector that a lot of projects are not financially viable. It does need to be amended because of the significant rise in costs and because of the siren call from the United States.
"We cannot go toe to toe with the United States in terms of subsidies, but what we can do is amend the mechanisms when it comes to those contracts."
Duncan Baker, North Norfolk Conservative MP, said he was concerned that, if the timescales for the wind farm construction changes, communities could be affected by construction for longer.
He said: "My primary concern is what it will mean for communities. There needs to be a sensible approach to completing the jobs and not extending disruption for a longer period."
A spokesperson for Norfolk County Council said: "We are naturally disappointed that the current development of the Norfolk Boreas Wind Farm has been paused.
"But during talks earlier today we were reassured that Vattenfall will continue to develop the rest of the Norfolk Offshore Wind Zone, including the imminent work along the western section of the cable corridor, in preparation for buried transmission system and onshore substation installation.
"We remain optimistic for future of the Norfolk Offshore Wind Zone, and we will await further information from Vattenfall as they evaluate their future position."
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