Energy firm RWE npower axes £4bn UK windfarm amid political uncertainty

Britain's green ambitions have been dealt a blow as a big six energy company has pulled the plug on one of the world's largest offshore windfarms, with the political storm enveloping the industry threatening the multibillion-pound investments needed to meet emissions targets and head off a looming capacity crunch.

Weeks after warning that the government was treating environmental subsidies as a "political football", the German-owned RWE npower is pulling out of the £4bn Atlantic Array project in the Bristol Channel because the economics do not stack up.

The move comes as figures show that energy firms reaped a 77% increase in profits per customer last year, due to bill increases that the big six say are partly due to government green levies.

The shelving of the Atlantic Array is a setback for the government, which is banking on bigger windfarms in deeper waters to help provide low-carbon power. The RWE cancellation is the first axing of a Round 3 windfarm – schemes such as those in Dogger Bank, Hornsea and East Anglia, which are supposed to help the government meet a target of generating 15% of energy from renewable sources by 2020. It will also raise further concerns about investors being frightened away by political rows and policy uncertainty.