Hornsea 4 axing puts 2030 targets in doubt

Having been awarded a Contract for Difference (CfD) in September 2024, the North Sea project has run into numerous financial hurdles, including rising supply chain costs and higher interest rates, all set against the backdrop of a looming global trade war. Ørsted claims these factors ‘increased the execution risk and deteriorated the value creation’ for Hornsea 4, casting doubts over the project’s timeline delivery and economic viability.  

Ørsted president and CEO Rasmus Errboe said the company remains “fully committed” to UK offshore wind, but that the numbers for this particular project simply weren’t stacking up. The Danish firm is expected to incur breakaway costs of around £500m as a result of the project’s hiatus.  

“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,” said Errboe.

“The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation.”

Errboe added that Ørsted was confident in the long-term fundamentals of UK offshore wind. The company is retaining the seabed rights, with a view to developing a project on the Hornsea 4 site at a later date. Despite this positive sentiment, the project’s abandonment in its current form will be seen as a major blow to the government’s green energy ambitions and its 2030 targets for offshore wind.

“Hornsea 4 represented about 10 per cent of the planned increase to meet (the government’s) aggressive 2030 low carbon electricity targets, and as it has been in development since 2018 it’s very unlikely an alternative could be identified and delivered within that timescale,” said Prof John Loughhead, Industrial Professor of Clean Energy at Birmingham University.

“Achieving the 2030 targets has become even more challenging. It appears a combination of supply chain inflation and delivery challenges meant the project became economically unattractive given the CfD price agreed with government only last September, which also suggests future offshore wind will need a higher guaranteed price than foreseen.”