Orsted withdraws from large wind project due to poor economic situation for renewable energy

• Orsted withdraws from offshore gigaproject - Hornsea 4
• The reasons are higher business costs, high interest rates and trade tensions.
• The British believe that Orsted will change its mind and return to the project
• Orsted together with PGE is implementing a Polish offshore project in the Baltic Sea - Baltica 2

Denmark's Orsted said the cancellation of the Hornsea 4 project would cost it up to 5.5 billion Danish kroner ($837.85 million).

Offshore champion gives reasons for decision to withdraw from Hornsea 4

“The combination of increased supply chain costs, higher interest rates and increased execution risk has eroded the expected value generated by the project,” the company’s CEO Rasmus Errboe said in a statement.

Errboe, who was appointed CEO in January , faces the challenge of restoring investor confidence and slimming down the company to meet the new realities of the offshore wind industry.

“We believe the decision was necessary to ensure that we only bring in assets that we are confident will deliver the value that we would like to see,” Errboe told reporters.

A final investment decision on the Hornsea 4 project has not yet been made .

The British still believe in cooperation with the Danes

British Energy Secretary Ed Miliband hoped the Danes' decision was not final

“ We remain committed to working with Ørsted to push for Hornsea 4 to be delivered by 2030,” Miliband told reporters during a visit to Norway.

The politician stressed that the UK, which aims to develop 50 gigawatts of clean power by 2030 , has an extensive plan for renewable energy projects and is confident of achieving its target.

Orsted shares value 80 percent lower than four years ago

The company's shares have fallen by about a third since Donald Trump was elected to a second term in November last year.

The Danish company’s market value has fallen by about 80% since its 2021 peak . Costs have risen, supply chains have been disrupted and the US president’s opposition to offshore wind has undermined investor confidence.

While Trump has backed the continued use of fossil fuels , the UK, the largest offshore wind market outside China and typically a stable growth region for Orsted, is seeking to decarbonise its electricity to reduce the sector’s emissions.

Orsted secured a 2.4 gigawatt contract for the Hornsea 4 project, located off the coast of Yorkshire in northern England, in the UK Renewable Energy Auction last September.

There is currently no market for large offshore projects.

The industry has struggled in recent years with rising costs, supply chain bottlenecks, higher interest rates and, most recently, trade tensions .

Ørsted said on Wednesday that US tariffs on steel, aluminium and related products had increased the costs of two offshore projects in the US , resulting in a loss of value of 1.2 billion crowns, but that their construction would continue.

The company also reported first-quarter earnings before interest, taxes, depreciation and amortization, excluding new partnerships and cancellation charges, of DKK 8.6 billion for the January-March period. Analysts on average had expected EBITDA of DKK 7.88 billion.

Orsted did not change its forecast for 2025, excluding new partnerships and cancellation charges, but the forecast does not include the cost of cancelling Hornsea 4.

Orsted is a Danish energy company founded 19 years ago. It employs almost 9 thousand people. For over a decade it has focused on the development of offshore, but also onshore wind farms.

It is also known on our market, and its flagship project is the participation in the construction of the Baltica 2 offshore wind farm, carried out together with PGE