Ørsted shelves 2.4GW UK offshore wind project over rising costs

Danish offshore wind developer Ørsted has discontinued the Hornsea 4 offshore wind project in the UK, citing rising costs and increased risks for development.

The Danish firm said that, since the contract for difference (CfD) award in September 2024, the 2.4GW Hornsea 4 project had seen several adverse developments relating to continued increase of supply chain costs, higher interest rates, and an increase in the risk to construct and operate the project of this size on the planned timeline.

Ørsted claimed that this increased the execution risk and deteriorated the value creation of the project, so the company decided to stop further spending at this time and terminate the project’s supply chain contracts. This means that the offshore wind developer will not deliver Hornsea 4 under the CfD awarded in allocation round 6.

“Ørsted will evaluate options for future development of the Hornsea 4 project given the continuing seabed rights, grid connection agreement, and development consent order,” the company explained in a statement.

As a consequence of the decision, Ørsted expects to incur breakaway costs of DKK 3.5-4.5bn ($533m-$685m) in 2025. The EBITDA impact is expected to be DKK 3-3.5bn ($457m-$533m), which includes a write-down of the offshore transmission assets and a provision for contract cancellation fees. The company will also write down capitalised construction costs of around DKK 500m-1bn ($76m-$152m).

”[…] 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 Rasmus Errboe, president and CEO of Ørsted.

He added that the adverse macroeconomic developments, continued supply chain challenges, and increased execution, market, and operational risks have eroded the value creation.

“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 concluded.