Denmark-based Ørsted has decided to discontinue the Hornsea 4 project – an offshore wind farm 69 km off the Yorkshire coast in the UK – in its current form. Since the Contract for Difference (CfD) award in allocation round 6 (AR6) in September 2024, the 2,400 MW Hornsea 4 project has seen several adverse developments relating to continued increase in supply chain costs, higher interest rates, and an increase in the risk to construct and operate Hornsea 4 on the planned timeline for a project of this scale.
In combination, these developments have increased the execution risk and deteriorated the value creation of the project. Therefore, Ørsted has taken the decision to stop further spend on the project at this time and terminate the project’s supply chain contracts, meaning that Ørsted will not deliver Hornsea 4 under the CfD awarded in AR6.
As a consequence of the decision, Ørsted expects to incur break-away costs of $521–670 million (DKK 3.5–4.5 billion) in 2025. The EBITDA impact is expected to be $446–$521 million (DKK 3.0–3.5 billion), this includes a write-down of the offshore transmission assets and a provision for contract cancellation fees (not part of guided EBITDA). In addition, capitalized construction costs of approximately $74–$148 million (DKK 0.5–1.0 billion) will be written down (impact below EBITDA).
Ørsted will evaluate options for future development of the Hornsea 4 project given the continuing seabed rights, grid connection agreement and Development Consent Order.
Rasmus Errboe, Group President and CEO of Ørsted, explained: “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. The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation for this project.
“I’d like to emphasize that Ørsted continues to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK. We’ll keep the project rights for the Hornsea 4 project in our development portfolio, and we’ll seek to develop the project later in a way that is more value-creating for us and our shareholders.”