The developer of the Hornsea 4 windfarm expansion has “discontinued” the project, blaming a surge in challenges including higher costs.
Orsted made the announcement while revealing a bigger than expected rise in first quarter profits despite increased headwinds facing its offshore wind interests.
The Danish firm secured funding for both Hornsea 3 and Hornsea 4 under the government’s auction of renewable energy “contracts for difference” last year.
Money latest: The challenges faced by a house seller
The projects, when combined, would have more than doubled the size of the existing Hornsea windfarm off the East Yorkshire coast – already the world’s largest.
It had the potential to add 2,400 MW of peak capacity – enough to power 2.6 million homes.
But the company said on Wednesday that Hornsea 4 was no longer viable in its current form.
It cited “several adverse developments relating to continued increase of supply chain costs, higher interest rates, and an increase in the risk to construct and operate Hornsea 4 on the planned timeline for a project of this scale”.
It added: “Orsted will evaluate options for future development of the Hornsea 4 project given the continuing seabed rights, grid connection agreement and Development Consent Order.”
The existing Hornsea development is already the world’s largest by area
The decision represents a blow to the government’s green energy ambitions.
It wants to erase the UK’s reliance on natural gas for energy security which, it says, will erase the country’s exposure to price volatility, bring down bills and bolster the fight against climate change at the same time.
Orsted boss Rasmus Errboe said: “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.
“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.”
Read more:
Wind power investment is good news but there are many challenges
A Department for Energy Security and Net Zero spokesperson responded: “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.”
