One of the largest offshore wind farms planned in the UK has been scrapped by its developer, Ørsted from Denmark, due to escalating costs and risks.
The fourth phase of the extensive Hornsea Wind Farm project, situated off the Yorkshire Coast, was set to feature 180 massive turbines capable of generating enough green energy to power about 1 million homes.
However, Rasmus Errboe, the CEO of Ørsted, mentioned in an investor statement that “the combination of increased supply chain costs, rising interest rates, and heightened execution risks has intensified project expectations.”
Consequently, the company will incur breakaway costs estimated between 3.5 billion and 4.5 billion Danish kroner (£399 million to £513 million).
The project was initially expected to reach a final investment decision later in the year.
This cancellation adds to Ørsted’s financial challenges, following the abandonment of two significant wind farm projects off the northeastern US coast late last year, which resulted in a £3 billion loss and hundreds of job cuts.
As a company primarily owned by the Danish government, Ørsted has faced obstacles in expanding its offshore wind business due to increasing costs impacting the global wind sector.
Developers are grappling with rising expenses linked to inflation and interest rates, along with global supply chain issues in the offshore wind market.
Ørsted noted on Wednesday that the wind industry is currently facing “short-term challenges from supply chain issues, regulatory hurdles, and macroeconomic conditions.”
Since taking office in January, US President Donald Trump has shown strong opposition to offshore wind initiatives.
Nonetheless, Ørsted maintains that the long-term prospects for offshore wind are positive, citing a growing global demand for electricity, an enhanced focus on energy security through renewable sources, and improved conditions in several key markets.
The Hornsea 4 project had recently secured its final government approval in July 2023. With a planned capacity of 2.6GW, it was set to be the second-largest government-approved wind farm, following Hornsea 3, expected to be completed in 2027.
The first two phases of the Hornsea development are already operational.
The decision to halt the Hornsea 4 project followed a challenging period, as the company implemented a restructuring plan in 2024 while trying to stabilize its finances, including cutting dividend payments to shareholders for the 2023-25 fiscal years. Since reaching its peak in 2021, Ørsted’s market value has dropped by around 80%.
This cancellation occurred alongside the company reporting first-quarter operating profits that exceeded expectations.
At the time of its construction, Hornsea 2 was the world’s largest offshore wind farm, generating enough energy for over 1.4 million homes and covering an area of 178 square miles.
