UPDATED 1 Sept: The EI library in London is temporarily closed to the public, as a precautionary measure in light of the ongoing COVID-19 situation. The Knowledge Service will still be answering email queries via email , or via live chats during working hours (09:15-17:00 GMT). Our e-library is always open for members here: eLibrary , for full-text access to over 200 e-books and millions of articles. Thank you for your patience.
New Energy World™
New Energy World™ embraces the whole energy industry as it connects and converges to address the decarbonisation challenge. It covers progress being made across the industry, from the dynamics under way to reduce emissions in oil and gas, through improvements to the efficiency of energy conversion and use, to cutting-edge initiatives in renewable and low-carbon technologies.
Ørsted hits pause on Hornsea 4 offshore wind project
14/5/2025
News
Ørsted has paused the planned development of the Hornsea 4 wind project offshore the UK, stating that increased supply chain costs, higher interest rates, and rising construction and operational risks have made the project financially unviable in its current form.
The 2.4 GW Hornsea 4 project was granted development consent by the government in July 2023 and secured a Contract for Difference (CfD) award in Allocation Round 6 (AR6) in September 2024 at a strike price of £58.87/MWh. To comprise 180 turbines, the development was to be located to the west of the wider Hornsea development off the Yorkshire coast. A final investment decision was due later this year.
The 1.2 GW Hornsea 1 project and 1.3 GW Hornsea 2 wind farm are already operational. Hornsea 3, with a capacity of 2.9 GW, will be the world’s single-largest offshore wind farm upon completion in winter 2027/2028, according to Ørsted.
Commenting on the news, Rasmus Errboe, Ørsted Group President and CEO, said: ‘We’ve been maturing the project over the past nine months and have been working relentlessly with stakeholders and suppliers to manage the different project risks for a project of this scale. Throughout the development phase we’ve been very diligent in our approach to capital commitment to our suppliers, and our committed capital is well below our threshold. The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation.’
Emphasising that Ørsted continued ‘to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK’, Errboe said the company planned to keep the project rights to Hornsea 4 and would evaluate options for its future development at a time that would be ‘more value-creating’ for the company and its shareholders.
The UK government has set a target of having 50 GW offshore wind in operation by 2030.
In response to Ørsted’s announcement, RenewableUK’s Deputy Chief Executive Jane Cooper said: ‘Although it’s disappointing when a project is put on pause, the UK remains one of the best places in the world to build offshore wind farms, with a significant pipeline, clear ambitions for contracting large volumes through upcoming auctions and supply chain funding. The unique cost pressures faced by Hornsea 4 have led to a rethink on this particular project, and we need to do everything we can to keep a stable market for all other projects going forward.’
She continued: ‘The fact that supply chain constraints have been cited as one of the reasons for this decision highlights the importance of investing to support the UK companies across the wind value chain as a central part of the UK’s industrial strategy. We urge the government to remove uncertainty for investors in this year’s auction for new clean power projects by ensuring auction parameters reflect the cost increases we’re seeing in the supply chain and inflationary pressures. Additionally, government should rule out the introduction of zonal pricing which would drive the cost of investment up even further.’
Echoing Cooper’s comments, Energy UK CEO Dhara Vyas added: ‘In 2024, wind overtook gas as Great Britain’s largest source of power. Along with the broad range of technologies we have, wind has already and will continue to play a significant role in reducing our reliance on foreign fossil fuels, and building a resilient energy system powered predominately by British sources. Not only will this boost energy security, it will grow our economy and bring down bills in the long term. The loss of such a big project will raise the stakes yet further for the forthcoming Contracts for Difference auction round, AR7. Whilst Ørsted has been clear this is not a result of government policy, with offshore wind playing such a critical role in our future energy ambitions it’s vital that the government doubles down to ensure AR7 is a success.’
Environmental group Greenpeace was also disappointed by the news. Greenpeace UK’s Head of Climate, Mel Evans, noted: ‘It is a tragic irony that gas-driven inflation is threatening the very thing that promises to bring down the soaring cost of energy, which has sent inflation and manufacturing costs through the roof. Getting off volatile and expensive gas and making renewables the backbone of our energy system has never been more necessary than it is right now.’
