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COPENHAGEN - Danish energy company Ørsted A/S (CPH:ORSTED) has announced the discontinuation of the Hornsea 4 offshore wind project in its current form, citing escalating supply chain costs, rising interest rates, and heightened construction and operational risks. The decision was made public today, signaling a significant shift in the company’s strategy for one of the UK’s major renewable energy initiatives.
The 2,400 MW Hornsea 4 project, which had secured a Contract for Difference (CfD) in September 2024, encountered adverse developments that increased the project’s execution risk and undermined its value creation potential. In response, Ørsted has terminated the project’s supply chain contracts and ceased further spending, stepping back from the CfD awarded in the sixth allocation round.
Rasmus Errboe, Group President and CEO of Ørsted, expressed the company’s commitment to supporting the UK government’s offshore wind targets but emphasized a value-focused approach to capital allocation. "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," said Errboe. He added that Ørsted would retain the project rights and seek future development opportunities that align with shareholder value.
The company anticipates incurring break-away costs ranging from DKK 3.5 to 4.5 billion in 2025, with an expected EBITDA impact between DKK 3.0 and 3.5 billion, including a write-down of offshore transmission assets and contract cancellation fees. Additionally, capitalized construction costs of approximately DKK 0.5 to 1.0 billion will be written down. Despite these costs, Ørsted’s EBITDA guidance for 2025 remains unchanged at DKK 25-28 billion, as does its gross investment guidance of DKK 50-54 billion.
The announcement underscores Ørsted’s strategic reassessment in the face of changing market conditions and project-specific challenges. The company, which is at the forefront of the transition to green energy, operates a diverse portfolio of renewable energy assets, including offshore and onshore wind farms, solar farms, energy storage facilities, and bioenergy plants. This decision is based on a press release statement from Ørsted.
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