Orsted cancel plans to build a huge wind farm in the North Sea
Ørsted pulled the plug on the Hornsea 4 project off the east of England on Wednesday as it blamed rising costs and interest rates.
The scheme would have seen 180 giant turbines built off the Yorkshire coast providing 2.4 gigawatts (GW) of power – enough for up to 2.6m homes when the wind was blowing. But nothing when the wind was still.
The project’s contribution would have been essential to Mr Miliband’s plans. The UK has just 16GW of offshore wind in operation, but Mr Miliband’s Clean Power 2030 Action Plan relies on reaching at least 43GW by 2030 – a target that was optometrist.
Rasmus Errboe, the chief executive of Ørsted, said the Hornsea 4 project had suffered “several adverse developments” since it secured the contract in September 2024, including rising 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”.
The Danish company also cited increased “execution risk”, suggesting it underestimated the difficulty of installing the planned 180 giant turbines.
Hornsea 4 benefited from government subsidies known as contracts for difference that guarantee a certain level of income after a project is built. Dr Constable said: “The prices offered by Ørsted to win the subsidies available under the contracts for difference system were unrealistic and did not reflect the underlying capital and operating costs.”
“The news that Orsted will not go ahead with Hornsea 4 in its current form reflects the significant challenges the offshore wind sector is facing,” Dhara Vyas, chief executive officer of industry group Energy UK. “The loss of such a big project will raise the stakes yet further for the forthcoming Contracts for Difference auction round.”
Even if the government can procure a record amount of capacity, those wind farms would need to be delivered at a pace rarely achieved in the industry, where projects often fall behind schedule. The world’s largest project, Dogger Bank, was originally supposed to complete by 2026. But after repeated delays, the first of three 1.2 gigawatt phases of the wind farm still isn’t done.
Impact on UK's Green Plans
The UK’s goal of having a clean power grid by 2030 is looking even more difficult to achieve after this cancelation.
Rapidly building a record amount of offshore wind is central to UK Energy Minister Ed Miliband’s ambitious plan. While reaching the clean grid target was already challenging, the cancellation of one of the biggest wind farms in the world will make it harder to achieve. And with Orsted citing insufficient returns as the reason for halting the project, it may mean UK consumers need to pay even higher prices to deliver the government’s plan.
“The Clean Power goal is definitely further out of reach in terms of the amount of capacity that needs to come online,” said Pranav Menon, senior research associate at Aurora Energy Research. “The challenge is looking bigger today.”
The UK is aiming for 95% of the country’s electricity from low-carbon sources like renewables or nuclear power by 2030. To reach that it will need at least 43 gigawatts of offshore wind capacity, nearly three times the amount already in operation. Without Orsted’s Hornsea 4 project, the UK is currently on track to have nearly 29 gigawatts in operation by then, based on the current pipeline of projects if no other developer decides to cancel, according to analysis by Aurora.
That means that over each of the next two offshore wind auctions, the government would need to procure about 7 gigawatts of capacity, matching a record level set in 2021.
“The news that Orsted will not go ahead with Hornsea 4 in its current form reflects the significant challenges the offshore wind sector is facing,” Dhara Vyas, chief executive officer of industry group Energy UK. “The loss of such a big project will raise the stakes yet further for the forthcoming Contracts for Difference auction round.”
Even if the government can procure a record amount of capacity, those wind farms would need to be delivered at a pace rarely achieved in the industry, where projects often fall behind
Source: Orsted plus Times and Telegraph
