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Danish firm Orsted halts huge UK offshore wind farm project / Photo: Thomas Traasdahl - Ritzau Scanpix/AFP/File
NYSE - LSE
Danish firm Orsted halts huge UK offshore wind farm project
Danish renewables firm Orsted said Wednesday it was shelving plans to build a massive wind farm off the UK coast due to rising costs, dealing a setback to Britain's clean energy goals.
The 2,400-megawatt Hornsea 4 project would have complemented two existing Orsted wind farms and a third under construction.
But Orsted said in a statement that the project "has seen several adverse developments", including rising supply chain costs, higher interest rates and an increased risk in building it on the planned timeline.
"We've decided to discontinue the development of the Hornsea 4 project in its current form," Orsted chief executive Rasmus Errboe said.
"The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation," he added.
The existing Hornsea 1 and 2 wind farms and the Hornsea 3 project will have a combined capacity exceeding five gigawatts.
Orsted said shelving the Hornsea 4 project would cost the company between 3.5 billion and 4.5 billion kroner ($533 million and $685 million).
"I'd like to emphasise that Orsted continues to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK," Errboe said.
"We'll keep the project rights for the Hornsea 4 project in our development portfolio, and we'll seek to develop the project later in a way that is more value-creating for us and our shareholders."
The British government said it would work with Orsted to revive the project.
"We recognise the effect that globally high inflation and supply chain constraints are having on industry across Europe," said a spokesperson for Britain's Department for Energy Security and Net Zero.
"We will work with Orsted to get Hornsea 4 back on track," the spokesperson said.
Orsted was already dealt a $4 billion blow in 2023 when it cancelled wind farm projects in the United States, a crucial market for the group.
Now the entire sector faces a major challenge in the United States after President Donald Trump froze federal permitting and loans for all offshore and onshore wind projects.
Orsted also reported first-quarter results on Wednesday showing sales rose eight percent to 20.7 billion kroner, lower than the 21.7 billion kroner forecast by analysts surveyed by financial data firm FactSet.
Its net profit, however, nearly doubled to 4.8 billion kroner.
F.T. Michaud--SMC
