Ørsted shares fell more than 2% on Wednesday after the Danish renewable energy giant announced it would halt development of its Hornsea 4 offshore wind farm project in the UK “in its current form.”
The decision comes in response to a series of adverse developments, including sharply rising supply chain costs, higher interest rates, and increased risks associated with constructing and operating a project of this scale on the planned timeline.
Since being awarded a Contract for Difference (CfD) in September 2024, the 2,400 MW Hornsea 4 project has faced mounting challenges that have eroded its value proposition. Ørsted stated it will discontinue further spending on the project, terminate supply chain contracts, and will not deliver Hornsea 4 under the CfD terms previously agreed.
The company expects to incur break-away costs of between DKK 3.5 billion and DKK 4.5 billion in 2025, which will include write-downs of transmission assets and provisions for contract cancellation fees.
Rasmus Errboe, Group President and CEO of Ørsted, emphasized that while the company remains committed to supporting the UK’s offshore wind ambitions, it must adhere to a strict, value-focused approach to capital allocation.
He cited ongoing macroeconomic headwinds, supply chain disruptions, and heightened execution risks as key reasons for discontinuing the project at this stage.
Despite the setback, Ørsted retains the seabed rights, grid connection agreement, and development consent order for Hornsea 4, and will evaluate future options for the site. The company reiterated its long-term confidence in the UK offshore wind market and signaled it may revisit the project under more favorable conditions.
The announcement weighed on Ørsted’s share price, reflecting investor concerns over the financial impact of the decision and the broader challenges facing the offshore wind industry amid inflationary pressures and regulatory uncertainty.