The cancellation of Hornsea 4, located off the Yorkshire coast, will result in costs of up to 5.5 billion Danish crowns ($837.85 million) for Ørsted, covering breakaway fees and write-downs. Rasmus Errboe, Ørsted’s CEO, explained: “The combination of increased supply chain costs, higher interest rates, and increased execution risk have deteriorated the expected value creation of the project.”
Ørsted reported a first-quarter profit before interest, tax, depreciation, and amortization (EBITDA), excluding new partnerships and cancellation fees, of 8.6 billion Danish crowns for January to March 2025. This exceeded analyst expectations of 7.88 billion crowns, according to a company-compiled poll. The company maintained its 2025 financial outlook, excluding new partnerships and cancellation fees, but noted that the Hornsea 4 cancellation costs were not factored into this projection.
The global renewable energy market has faced significant hurdles, including supply chain bottlenecks and rising interest rates, impacting Ørsted’s operations. The company’s market value has declined by approximately 80% since its 2021 peak, reflecting broader industry challenges. Ørsted also highlighted difficulties in the U.S. market, where delays and financial impairments have occurred, compounded by regulatory uncertainties.
Ørsted is evaluating potential impacts from U.S. tariffs and regulatory changes on its operations. Meanwhile, Britain continues to prioritize decarbonizing its electricity sector to address climate change, with offshore wind playing a key role in its renewable energy strategy.
The Hornsea 4 cancellation follows other industry setbacks, such as Norway’s Equinor halting its Empire Wind I project in New York last month due to a U.S. regulatory stop-work order. Despite these challenges, Ørsted remains focused on advancing its renewable energy portfolio, including ongoing projects like Hornsea 3, which is set to be the world’s largest offshore wind farm upon completion in 2027.
