Scottish Power has said it might scale back the capacity of an offshore wind farm it plans to build because the UK government's subsidy budget is too low.
The East Anglia 1 offshore wind farm, planned to be built off the east coast of England, was originally designed to have an installed capacity of 1.2GW, which would have made it one of the biggest in the country.
But Scottish Power, owned by Spain's Iberdrola, said it may have to cut the number of turbines due to changes in the subsidy regime, which sets a minimum price for electricity sold from specific green energy projects.
Earlier this month, the government set its budget for supporting offshore wind and marine energy in 2014/15 using the new mechanism at £235m, £80m of which is allocated to projects set to start operating from 2017/18 onwards.
"(The government's) smaller than expected annual ... budget pot for less-established technologies at £235m per year is likely to mean a smaller project," Scottish Power said in a statement.
The company said it was planning on making a financial investment decision for the East Anglia 1 project in early 2016.
The news comes on the same day as Scottish Power and Denmark's DONG Energy produce first full-scale electricity from their 389MW West of Duddon Sands offshore wind farm, off the west coast of England, two months sooner than planned.