Swedish utility Vattenfall will not go ahead with the giant Vidar offshore wind park, one of two given the greenlight by the government this week, because it would not be profitable, CEO Anna Borg said.
Vidar, off Sweden's coast north of Gothenburg, has the potential to deliver 7.8 terawatt hours of electricity to southern Sweden, where a lack of power has been a big problem for industry.
"Currently, the calculation doesn't add up," Borg said.
"The two main reasons are, first, that there is no transmission grid ...offshore in Sweden. Second, electricity prices are too low to justify building new capacity."
The government ended a subsidy for connecting offshore wind projects to Sweden's electricity grid in 2022, prompting Vattenfall to pause the development of another wind park in southern Sweden, Kriegers Flak.
Borg said even restoring that would not make offshore wind a profitable proposition.
"Over a longer time horizon we still do not see the increase in demand that would push prices up to levels where investing in these wind farms becomes profitable," she told Reuters after the company's second quarter results.
Sweden's energy mix is nearly 100% fossil free and prices are much lower than in countries like Germany, where Vattenfall is building that country's largest offshore wind farm, Nordlicht.
Unlike many other countries, Sweden doesn't subsidise wind power. Instead the government is offering hundreds of billions of crowns in cheap loans and price guarantees to nuclear developers. The government says the country needs base power that does not rely on the weather.
($1 = 9.6476 Swedish crowns)
(Reuters - Reporting by Simon Johnson; Editing by Emelia Sithole-Matarise)