Ørsted Halts Hornsea 4 Offshore Wind Project Amid Rising Costs
Ørsted, the Danish energy giant, has announced the discontinuation of its Hornsea 4 offshore wind project in the UK, citing escalating supply chain costs, higher interest rates, and increased construction and operational risks. The decision marks a significant setback for the UK's renewable energy sector, which is pivotal to the country's net zero ambitions. The 2.4 GW project, awarded a Contract for Difference (CfD) in September 2024, will not proceed under the current terms, with Ørsted opting to terminate supply chain contracts and halt further investment.
The company emphasized that the cumulative impact of these adverse developments has significantly heightened the project's execution risk and eroded its value proposition. Ørsted plans to explore alternative development options for Hornsea 4, leveraging its retained seabed rights, grid connection agreement, and Development Consent Order. This move underscores the challenges facing large-scale renewable energy projects in the current economic climate, where financial and logistical hurdles are becoming increasingly difficult to navigate.
Rasmus Errboe, Ørsted's Group President and CEO, reiterated the company's commitment to supporting the UK government's offshore wind targets but stressed the necessity of a value-focused approach to capital allocation. The decision to discontinue Hornsea 4 was made well ahead of the planned Final Investment Decision in 2025, reflecting the company's cautious stance in the face of mounting uncertainties. This development raises questions about the viability of other large-scale renewable projects under similar pressures.
The cancellation of Hornsea 4 has sparked concerns over the UK's ability to meet its ambitious clean power targets by 2030. Critics argue that the government's current framework may not adequately address the financial and operational challenges faced by developers. As the energy sector grapples with these issues, the spotlight is now on policymakers to reassess strategies and ensure the resilience of the UK's renewable energy infrastructure in pursuit of its net zero goals.
