Call for manufacturing support as Ørsted shelves UK’s huge Hornsea offshore wind project

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THE UK’s renewables trade group has urged the government to do more to support domestic manufacturing after one of the UK’s largest planned offshore wind projects was cancelled because of increases in supply chain costs and construction risks.

Ørsted, the developer of the huge Hornsea wind project off the coast of Yorkshire, announced today that it has shelved the fourth phase of the project which would have added 2.4 GW of capacity, enough to power more than a million homes.

Ørsted blamed “several adverse developments relating to continued increase of supply chain costs, higher interest rates, and an increase in the risk to construct”.

Jane Cooper, deputy CEO of the trade group RenewableUK, said: “The fact that supply chain constraints have been cited as one of the reasons for this decision highlights the importance of investing to support the UK companies across the wind value chain as a central part of the UK’s industrial strategy.”

Cooper urged the government to remove uncertainty for investors by ensuring this year’s auction for new clean power projects reflect “the cost increases we’re seeing in the supply chain and inflationary pressures”.

The government has said it will publish its long-awaited industrial strategy and sectoral plans this spring, outlining its policies on innovation, infrastructure and skills that are needed to support growth.

Ørsted CEO Rasmus Errboe said the company continues to believe in the long-term value of offshore wind in the UK.

He 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.”

Last year, the project won a contract from the government guaranteeing it a fixed price of £58.87 (US$78.68) per megawatt hour generated.

Hornsea 4 would have added up to 180 turbines and 2.4 GW of capacity to Ørsted’s huge wind farm off the Yorkshire coast. The first two phases of the project are already operational with 339 turbines providing 2.6 GW of power. Ørsted made a final investment decision on the third phase in 2023, a 2.9 GW expansion it described as world’s single largest offshore wind farm.  

The cancellation appears a significant blow to the country’s clean power goals. The UK government has a target for 43–50 GW of wind capacity by 2030.

There is 15 GW of offshore wind capacity operating today, a further 6.8 GW under construction and 13.9 GW of planned capacity that has been given consent according to data from RenewableUK.

A spokesperson for the government’s Department for Energy Security and Net Zero said: “We recognise the effect that globally high inflation and supply chain constraints are having on industry across Europe, and we will work with Ørsted to get Hornsea 4 back on track.

“We have a strong pipeline of projects to deliver clean power by 2030, and our mission-led approach ensures we can steer our way through global pressures and individual commercial decisions to reach our targets.”

RenewableUK agreed there is a significant pipeline of projects but has warned that the government should rule out the introduction of zonal pricing which it says will deter investors.

Energy secretary Ed Miliband has said he is considering implementing changes aimed at lowering the cost of energy bills in regions that generate more power in a bid to encourage investment in green energy closer to where there is demand for power.

RenewableUK has warned the change would “drive the cost of investment up even further”.