Ørsted to discontinue Hornsea 4 offshore wind project ‘in its current form’

In a statement, the company said that, since it was awarded a Contract for Difference (CfD) for the project in the UK’s allocation round 6 (AR6) in September 2024, the 2.4-GW project “has seen several adverse developments.”

Ørsted said supply chain costs have increased and interest rates have risen. It said the risk of constructing and operating Hornsea 4 according to the planned timeline for the project had also increased.

“In combination, these developments have increased the execution risk and reduced the value creation of the project,” said the company. “Therefore, Ørsted has taken the decision to stop further spend on the project at this time and terminate the project’s supply chain contracts.” 

This means Ørsted will not deliver Hornsea 4 under the CfD awarded in AR6, and will evaluate options for future development of the project, given the seabed rights, grid connection agreement and Development Consent Order it has obtained.

Ørsted group president and chief executive 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. We appreciate the work they have 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 have 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.

“We have 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. Adverse macroeconomic developments, supply chain challenges, and increased execution, market and operational risks have eroded value creation.

“I would like to emphasise that Ørsted continues to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK. We will keep the project rights for the Hornsea 4 project in our development portfolio, and will seek to develop the project later in a way that creates better value for us and our shareholders.”

As a consequence of the decision, Ørsted expects to incur breakaway costs of Dkr3.5Bn (US$533M) to 4.5Bn in 2025. The EBITDA impact is expected to be Dkr3.0Bn to 3.5Bn. This includes a write-down of the offshore transmission assets and a provision for contract cancellation fees (not part of guided EBITDA). In addition, capitalised construction costs of approximately Dkr0.5Bn to 1.0Bn will be written down.

Ørsted’s previously guided EBITDA for 2025, excluding new partnership agreements and cancellation fees, of Dkr25-28Bn remains unchanged. Similarly, Ørsted’s gross investment guidance for 2025 is unchanged at Dkr50-54Bn.