**UK:** Danish energy giant Ørsted has cancelled its Hornsea 4 wind farm off Norfolk after sharp rises in supply chain costs and interest rates rendered the project financially unviable, marking a significant setback in Britain’s offshore wind expansion plans amid broader market instability.
Ørsted Cancels Hornsea 4 Project Amid Rising Costs and Economic Pressures
Danish renewable energy giant Ørsted has announced the cancellation of its ambitious Hornsea 4 offshore wind project, located off the Norfolk coast. This decision reflects a broader trend within the industry, where rising costs and an unstable economic climate are increasingly reshaping project viability. Just eight months after receiving a contract for difference (CfD) from the UK government, Ørsted stated that the initial financial framework no longer aligns with the project’s circumstances.
According to Rasmus Errboe, Ørsted’s group president and chief executive, the firm has faced “several adverse developments,” including escalated supply chain costs, higher interest rates, and increased operational risks that have emerged since the project’s conception in September 2024. The magnitude of these challenges has led Ørsted to halt any further expenditures and terminate existing supply chain contracts associated with Hornsea 4.
The ramifications of this decision are significant. Hornsea 4 was poised to contribute a generating capacity of 2.4 GW, enough to power over a million homes, by adding another 180 turbines to Ørsted’s already impressive portfolio. The company has constructed Hornsea 1 and Hornsea 2, both operational, and has begun work on Hornsea 3, which is expected to be completed by 2026 and will provide a capacity of 2.9 GW. Despite cancelling Hornsea 4, Ørsted retains the rights to the project and may pursue its development under potentially more favourable economic conditions in the future.
The news comes at a precarious time for offshore wind energy in the UK, a sector that the government aims to see tripled in capacity by 2030. Industry stakeholders such as Jane Cooper, deputy chief executive of RenewableUK, have voiced disappointment yet remain optimistic about the UK’s overall appeal for offshore wind projects. She emphasized the need for stabilising the market for future developments and urged the government to adjust auction parameters in response to increasing costs.
Adding further context, Ørsted’s predicament is not an isolated incident. Vattenfall, another key player in the offshore wind sector, also encountered similar setbacks earlier this year. Ørsted has reportedly faced a staggering decline in market value, down approximately 80% from its peak in 2021, raising concerns about the resilience of major renewable energy initiatives amidst ongoing economic instability.
Macro-level factors influencing this situation include inflationary pressures and logistical constraints that have plagued the industry. Ørsted’s cancellation of Hornsea 4 has been linked to a combination of rising interest rates and supply chain disruptions, echoing trends seen not only in the UK but also in the US, where Ørsted has recently scrapped two wind farm projects off the New Jersey coast, incurring significant financial losses.
Despite the present challenges, Errboe has expressed a steadfast commitment to the UK offshore wind sector, underscoring the “long-term fundamentals” that continue to support renewable energy. This commitment echoes the UK government’s own objectives for future clean energy infrastructure, as it seeks collaboration with Ørsted to potentially rally Hornsea 4 back into the development fold when market conditions improve.
The future of offshore wind remains intertwined with governmental support and industry adaptation to economic realities. As companies navigate this challenging landscape, the need for strategic planning and stakeholder engagement will be crucial to drive the UK’s clean energy ambitions forward.
Reference Map:
- Paragraph 1 – [[1]](https://www.theconstructionindex.co.uk/news/view/danes-cancel-hornsea-4), [[2]](https://www.ft.com/content/7015e906-6415-4c35-a992-88f5f3e60e07)
- Paragraph 2 – [[1]](https://www.theconstructionindex.co.uk/news/view/danes-cancel-hornsea-4), [[5]](https://www.theguardian.com/business/2023/nov/14/wind-developer-orsted-bosses-exit-us)
- Paragraph 3 – [[2]](https://www.ft.com/content/7015e906-6415-4c35-a992-88f5f3e60e07), [[3]](https://www.reuters.com/sustainability/climate-energy/offshore-wind-developer-orsted-q1-beats-forecasts-2025-05-07/)
- Paragraph 4 – [[1]](https://www.theconstructionindex.co.uk/news/view/danes-cancel-hornsea-4), [[2]](https://www.ft.com/content/7015e906-6415-4c35-a992-88f5f3e60e07)
- Paragraph 5 – [[2]](https://www.ft.com/content/7015e906-6415-4c35-a992-88f5f3e60e07), [[7]](https://www.telegraph.co.uk/business/2023/11/01/orsted-british-wind-farm-plans-us-projects-hornsea/)
- Paragraph 6 – [[3]](https://www.reuters.com/sustainability/climate-energy/offshore-wind-developer-orsted-q1-beats-forecasts-2025-05-07/), [[7]](https://www.telegraph.co.uk/business/2023/11/01/orsted-british-wind-farm-plans-us-projects-hornsea/)
Source: Noah Wire Services
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