The Danish company Ørsted has decided to suspend the development of the Hornsea 4 offshore wind farm, one of the largest planned energy projects in the United Kingdom with a capacity of 2,400 MW. The decision is in response to a significant increase in supply chain costs, rising interest rates and increased operational and market risks.
Since Ørsted was awarded the contract for difference (CfD) in Allocation Round 6 in 2024, the Hornsea 4 project has faced increasing economic hurdles. The company confirmed that these factors have deteriorated the financial viability and value creation of the project, forcing a complete re-evaluation.
Economic impact of the cancellation of Hornsea 4
Ørsted has announced that it will terminate all contracts related to the project’s supply chain. This will involve separation costs of between DKK 3.5 billion and DKK 4.5 billion, with an impact on EBITDA of DKK 3.0 billion to DKK 3.5 billion. In addition, up to DKK 1 billion in capitalized construction costs will be written off.
Rasmus Errboe, group president and CEO of Ørsted, assured that the company remains committed to wind development in the UK. However, he stressed that investment decisions will continue to be based on a value-focused approach. Hornsea 4 could be reconsidered in the future if more favorable conditions present themselves.
Rights to the seabed are retained
Despite the current cancellation, Ørsted will retain the rights to the seabed, the grid connection agreement and the Development Consent Order. This leaves the door open for a redesign of the project with better returns for shareholders.
Based in Denmark, Ørsted continues to position itself as a key player in the energy transition. energy transition transition. The company maintains its investment forecast for 2025 and remains committed to clean technologies such as solar power, energy storage and bioenergy. Its strategic exit from Hornsea 4 does not represent a step backwards, but rather an adjustment to new economic realities.
Follow us on social media and don’t miss any of our posts!
YouTube LinkedIn Facebook Instagram X (Twitter) TikTok
Source: Ørsted
Photo: shutterstock
