Orsted shelves North Sea wind project

(Sharecast News) - Denmark's Orsted has pulled out of a vast offshore wind project in the North Sea, it confirmed on Wednesday, on the back of rising costs and ongoing delays. In a blow to government plans to transition away from fossil fuels, the firm - the world's largest offshore wind developer - said it had decided to discontinue the Hornsea 4 project "in its current form".

Rasmus Errboe, Orsted's recently-installed chief executive, said: "We remain fully committed to being an important partner to the UK government, to help them achieve their ambitious target for offshore wind build-out.

"However, our capital allocation is based on a strict and value-focused approach.

"The adverse macroeconomic developments, continued supply chain challenges and increased execution, market and operational risks have eroded the value creation."

The offshore wind sector has endured a difficult few years, hit hard by high interest rates as well as supply chain issues. Orsted's share price, which has fallen by around 80% since a peak in 2021, was down 4% as at 1430 BST.

The decision is also a blow to the UK government. It is seeking to massively expand the country's offshore wind capacity, as part of wider plans to decarbonise the electricity system. The 2.4 gigawatt Hornsea 4 project off the Yorkshire coast would have been capable of powering more than 1m homes

The Department for Energy Security and Net Zero said it would "work with Orsted to get Hornsea 4 back on track".

Orsted confirmed it would keep the project rights in its development pipeline and could yet seek to develop it at a later date.

Cancelling the project in its current form would cost it up to 5.5bn Danish krone (£630m), Orsted added.

Tania Kumar, net zero director at the CBI, said: "Toda's announcement reflects the growing challenges facing businesses delivering major infrastructure work across the UK.

"But it should not detract from the UK's record leading one of the world's most rapid rollouts of offshore winds, made possible by our market-based investment models."