Orsted axes Hornsea 4 offshore wind project
Ørsted has announced plans to ditch the Hornsea 4 offshore wind project in a big blow to the UK’s clean power ambitions.
The Danish renewable energy company said it would incur break-away costs of between 3.5bn to 4.5bn Danish krone (£400m to £512m) as a result of the decision.
Ørsted said the 2,400MW project had seen “several adverse developments” including increasing supply chain costs, higher interest rates and an increase in the risk of completing the project within the planned timescale.
”We remain fully committed to being an important partner to the UK government to help them achieve their ambitious target for offshore wind build-out and appreciate the work they’ve done to deliver a clear framework to support offshore wind,” Rasmus Errboe, group president and chief executive said in a statement on Wednesday.
“However, our capital allocation is based on a strict and value-focused approach, and after careful consideration, we’ve decided to discontinue the development of the Hornsea 4 project in its current form, well ahead of the planned final investment decision later this year.”
He added: “I’d like to emphasise that Ørsted continues to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK.”
Offshore wind taken out of its sails
Based off the Yorkshire coast in the North Sea, Hornsea 4 was one of nine offshore wind projects which were awarded government contracts last September as part of a record breaking auction. These included Hornsea 3, the world’s biggest offshore wind farm.
Ørsted said it planned to evaluate options for future development at the Hornsea 4 site, given it had already acquired seabed rights and a connection agreement with National Grid.
“We’ll keep the project rights for the Hornsea 4 project in our development portfolio, and we’ll seek to develop the project later in a way that is more value-creating for us and our shareholders,” Errboe added.
The developer has suffered a bruising few years amid management issues and a tough economic backdrop which has conspired to ramp up costs for wind farm developers.
Shares have fallen nearly 40 per cent over the last 12 months. It said on Wednesday full-year guidance for pre-tax earnings (EBITDA) in 2025 remained unchange
A DESNZ spokesperson said: “We recognise the effect that globally high inflation and supply chain constraints are having on industry across Europe, and we will work with Orsted to get Hornsea 4 back on track.
“We have a strong pipeline of projects to deliver clean power by 2030 and our mission-led approach ensures we can steer our way through global pressures and individual commercial decisions to reach our targets.
“Through our mission we will deliver an energy system that brings energy bills down for good and bolsters Britain’s energy security as part of our Plan for Change.”