Offshore Wind Sector Rocked by Shelving of Huge Government-Backed Project as Costs Rise

Danish energy company Ørsted has scrapped plans for Hornsea 4 – once projected to be one of the world’s largest offshore wind farms. The 2.4 GW project, located off Yorkshire's coast, was backed by the UK government but has been abandoned due to worsening economic conditions.

Despite holding government approvals and a Contract for Difference (CfD) of £58.87/MWh, Ørsted cited rising costs, supply chain issues, and escalating risks as the main reasons behind halting the project. The termination will result in “break-away” costs of DKK 3.5–4.5 billion in 2025.

Ørsted’s CEO Rasmus Errboe said the decision was made early, ahead of the planned Final Investment Decision. Although Hornsea 4 will not proceed in its current form, Ørsted plans to retain development rights and explore future value-driven pathways for the site.

Hornsea 4 was part of Ørsted’s portfolio of massive offshore developments. The company previously brought Hornsea 1 (1.2 GW) and Hornsea 2 (1.3 GW) online, with Hornsea 3 (2.955 GW) still in progress despite sharing the auction round with Hornsea 4.

The UK’s clean energy targets—aiming to quadruple offshore wind capacity by 2030—have been dealt a blow. While the Department for Energy Security and Net Zero acknowledged global inflation and supply chain constraints, industry experts voiced criticism of Ørsted’s withdrawal, calling for stricter penalties and enforcement mechanisms.

Critics, like energy analyst Jérôme à Paris, argue that Ørsted should face stronger consequences for pulling out post-CfD award. Suggestions include heavy bid bonds, project execution mandates, and even temporary bans on future offshore licences to ensure accountability and prevent unrealistic bidding.

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