Ørsted to discontinue the Hornsea 4 offshore wind project in its current form

Since its Contract for Difference (CfD) award in allocation round 6 (AR6) in September 2024, the 2400 MW Hornsea 4 project has seen several adverse developments relating to continued increase of 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.

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, commented: “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 have 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 have decided to discontinue the development of the Hornsea 4 project in its current form, well ahead of the planned Final Investment Decision later in 2025.”

Errboe added: “We have been maturing the project over the past nine months and have been working relentlessly with stakeholders and suppliers to manage the different project risks for a project of this scale. Throughout the development phase, we have been very diligent in our approach to capital commitment to our suppliers, and our committed capital is well below our threshold. The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market, and operational risks have eroded the value creation.”

Concluding, Errboe noted: “I would like to emphasise that Ørsted continues to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK. The company will keep the project rights for the Hornsea 4 project in our development portfolio and will seek to develop the project later in a way that is more value-creating for us and our shareholders.”

As a consequence of the decision, Ørsted expects to incur break-away costs of DKK 3.5 – 4.5 billion in 2025. The earnings before interest, taxes, depreciation, and amortisation (EBITDA) impact is expected to be 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, capitalised construction costs of approximately DKK 0.5 – 1.0 billion will be written down (impact below EBITDA).

Ørsted's previously guided EBITDA for 2025, excluding new partnership agreements and cancellation fees, of DKK 25 – 28 billion remains unchanged. Similarly, Ørsted's gross investment guidance for 2025 is unchanged at DKK 50 – 54 billion.

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