Ørsted Halts Hornsea 4 Project Citing Costs and Execution Risks
Danish energy giant Ørsted has announced it will no longer proceed with the 2.4 GW Hornsea 4 offshore wind farm in its current form. The company cited a combination of worsening market conditions, including continued supply chain cost increases, higher interest rates, and greater execution risk for projects of this scale.
Hornsea 4 was awarded a Contract for Difference (CfD) in the UK government’s sixth allocation round (AR6) in September 2024, but Ørsted said recent developments had significantly eroded the project’s value proposition. The company will now halt further spending and terminate related supply chain contracts.
“We’ve been maturing the project over the past nine months and working relentlessly to manage risks,” said Rasmus Errboe, Ørsted’s Group President and CEO. “However, the adverse macroeconomic developments and continued supply chain challenges have eroded the value creation.”
Ørsted said it would retain the seabed rights, grid connection agreement, and Development Consent Order for Hornsea 4, and may seek to revisit the project in a more viable form in the future.
A Major Project and a Big Signal
Hornsea 4 was set to be one of the world’s largest offshore wind farms and a crucial element of the UK’s push to scale up renewable electricity by 2030. Its cancellation marks one of the clearest signs yet that the economics of mega-projects in the offshore sector are under intense strain.
The company expects to incur breakaway costs of up to DKK 4.5 billion in 2025 (approx. £500 million), primarily related to contract cancellations and asset write-downs. Despite this, Ørsted is maintaining its overall investment and earnings guidance for the year.
Industry Under Pressure
The move comes amid a difficult financial climate for offshore wind developers. Inflation and rising interest rates have pushed up capital costs, while supply chain delays and bottlenecks have made project timelines harder to manage. In the UK and beyond, several high-profile offshore wind projects have recently been shelved, delayed, or restructured.
Hornsea 4 follows Ørsted’s earlier write-downs on U.S. offshore projects in 2023 and setbacks at other UK sites. Industry analysts say the CfD regime — designed to de-risk renewable investments — may no longer offer sufficient flexibility for today’s market volatility.
Policy and Planning Challenges
While the UK government has reaffirmed its goal of 50 GW of offshore wind by 2030, developers argue that grid delays, inflation, and tighter financial conditions are threatening progress. Last year’s CfD allocation round saw limited offshore wind participation due to low bid prices and high build costs. Reforms in AR7 are expected, but developers remain cautious.
Hornsea 4’s location in the North Sea, east of Yorkshire, made it a critical part of Ørsted’s Hornsea cluster — which already includes Hornsea 1, 2, and the under-construction Hornsea 3. The fourth phase would have built on the UK’s reputation as a global offshore wind leader.
Still in the Game
Despite the setback, Ørsted says it remains committed to UK offshore wind and will continue to assess opportunities for future development. The company has not ruled out a restructured version of Hornsea 4 at a later date, once market conditions improve.
“We continue to firmly believe in the long-term fundamentals of offshore wind in the UK,” said Errboe. “We’ll seek to develop the project later in a way that is more value-creating.”
For now, the decision underscores the need for stronger policy and financial frameworks to keep pace with the ambition of clean energy targets — especially for large, capital-intensive technologies like offshore wind.