Energy company Ørsted is discontinuing the Hornsea 4 offshore wind project in the UK in its current form due to increasing supply chain costs, rising interest rates and construction risks.
The 2.4GW project was awarded a contract for difference (CfD) in September 2024.
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Recent developments have led to a re-evaluation of the project’s feasibility within the planned timeline.
Ørsted has decided to cease further expenditure on the project and terminate its supply chain contracts.
The company will not deliver Hornsea 4 under the CfD awarded in Allocation Round 6 (AR6), which significantly impacted the project’s risk and value creation.
It will assess potential future development options, taking into account seabed rights, grid connections and development consent.
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By GlobalDataØrsted expects to incur breakaway costs between Dkr3.5bn ($532m) and Dkr4.5bn in 2025.
The company has also indicated an impact on earnings before interest, taxation, depreciation and amortisation (EBITDA) of Dkr3bn to Dkr3.5bn, including write-downs of offshore transmission assets and contract cancellation fees.
Capitalised construction costs between Dkr0.5bn and Dkr1bn will also be written down.
Despite the setbacks, Ørsted’s previous EBITDA guidance for 2025 remains unchanged, with an expected range of Dkr25bn to Dkr28bn.
The company’s gross investment guidance for 2025 is still set at Dkr50bn to Dkr54bn, unaffected by the Hornsea 4 decision.
Ørsted Group president and CEO Rasmus Errboe stated: “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 and appreciate the work they’ve 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’ve 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.”
Last November, Ørsted initiated stake divesture in its 2.9GW Hornsea 3 offshore wind farm.
