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The world’s largest offshore wind developer is halting work on a vast UK project blaming rising costs and risk of delays, in a blow to Britain’s clean energy goals.
Ørsted said on Wednesday it was stopping spending and cancelling contracts for its Hornsea 4 project in the North Sea, a 2.4 gigawatt project that would have been capable of powering more than a million homes.
The project won a contract from the UK government last year guaranteeing it a fixed electricity price of £58.87 per megawatt hour, but Ørsted said it could currently not make the proposed wind farm work.
“Adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation,” said chief executive Rasmus Errboe.
He added the company would keep hold of the development rights and “seek to develop the project later in a way that is more value-creating for us and our shareholders”.
The Danish energy company said the decision would cost it DKr3.5bn-DKr4.5bn this year (£399mn-£513mn) in break costs from cancelled contracts with suppliers.
The UK government wants the country’s offshore wind capacity to expand more than threefold by 2030 to meet its goal of decarbonising the electricity system by then.
Hornsea 4, off the coast of Yorkshire, was the largest offshore wind farm to secure a government contract in last year’s auction round and one of only two such projects bidding for the first time.
Ørsted’s decision comes as it tries to restore its credibility with shareholders following a bruising few years in which it has also walked away from offshore projects in the US.
Errboe, a company insider, was appointed chief executive in January to replace predecessor Mads Nipper, who presided over an 80 per cent fall in the company’s share price from highs in January 2021. The company is currently valued at DKr112bn (£12.7bn).
The offshore wind sector has been battling rising costs over the past few years stemming from supply chain strains and higher interest rates. The industry this year has been hit further by US President Donald Trump’s decision to suspend development permits.
Errboe warned last month that the industry was at risk of a “downward spiral” and called on European governments to do more to support the sector.
Ørsted’s suspension of the Hornsea 4 project follows Swedish rival Vattenfall’s decision in July 2023 to pull out of its 1.4GW wind farm project off the coast of Norfolk, also owing to rising costs.
The project, Norfolk Boreas, was subsequently sold to German energy group RWE, which plans to develop it.
The UK Department for Energy Security and Net Zero said it would “work with Ørsted to get Hornsea 4 back on track”.
A spokesman for the department added: “We recognise the effect that globally high inflation and supply chain constraints are having on industry across Europe. We have a strong pipeline of projects to deliver clean power by 2030.”
