Orsted Cuts Investment Plans and Torpedoes Miliband's Clean Power 2030
Looks like the 2.4GW Hornsea 4 Awarded a CfD in AR6 has been cancelled
Yesterday, Orsted made an announcement to cut its investment plans out to 2030 by 25%. They said:
“We’ll reduce our investment programme towards 2030 through a stricter, more value-focused approach to capital allocation. We do this to ensure a stronger balance sheet, supporting a solid investment grade rating, and to ensure that we only invest our capital in the most financially attractive opportunities.
“Our number one priority throughout the next three years will be to deliver on our committed 8.4 GW offshore wind construction programme, which will almost double our installed offshore wind capacity. The market remains challenging, but delivering on this programme will solidify our position as the undisputed global leader in offshore wind.…
“These adjustments will not affect the execution of the 9 GW of renewable projects that Ørsted is currently constructing. The construction portfolio brings line of sight to an expansion of renewable capacity from 18 GW to more than 27 GW.
…
“The previous ambition for installed renewable capacity of 35-38 GW by 2030 and the targeted EBITDA (excluding new partnerships) of approx. DKK 39-43 billion in 2030 have been discontinued.”
Danish firm Orsted is the leading offshore wind developer in the UK and claims to be the leading offshore wind developer in the world. Yesterday’s announcement comes hot on the heels of Orsted’s CEO being replaced last month and the chairman, finance chief and operating officer being fired last year. Yesterday’s news was not specific about which projects will continue and which will be cancelled. It looks like Hornsea Project 3 that is already under construction will continue.
However, significant doubt has been placed over the 2.4GW Hornsea Project Four (H4) that won a Contract for Difference (CfD) at a 2024 price of £82/MWh in Allocation Round 6 (AR6) when the results were announced last September. According to H4 latest newsletter, the project has been granted planning permission and won a CfD but it has not yet passed the Final Investment Decision. It certainly looks like this project is on the chopping block to be cancelled.
It is all but certain that Orsted will not be participating in the forthcoming Allocation Round 7 (AR7) to win new subsidy contracts. Of course, this torpedoes Ed Miliband’s plan to almost quadruple offshore wind capacity by 2030. The loss of Hornsea Project Four and the lack of participation of Orsted in new auctions will leave a massive gap to be filled. If the world’s leading offshore wind developer is feeling the pinch, then we can be fairly sure that other developers will be facing significant challenges too.
This sudden announcement may explain why AR7 announcements appear to be behind schedule. The Administrative Strike Prices for AR6 were announced in November 2023, more than four months before the auction process began in March 2024 and some ten months before the results were announced. Yet, we do not yet know the strike prices for AR7, nor the date for the start of applications. We might expect Miliband to offer even more of our money to try and keep his plans on track and for strike prices to rise again.
It is certainly looking like Miliband’s insane plans for offshore wind to provide the bulk of our electricity generation by 2030 are holed below the waterline. Instead of the answer blowing in the wind, it’s an entirely different fluid emanating from a different orifice.
I have used Twitter/X to ask Orsted UK for comment.
[Update 6/2/25] Orsted has released its investor presentation that moves Hornsea 4 out of the investment plan.
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Isn't there a single brave journalist out there who will confront Millivolt with these increasing costs versus his promise of lower energy bills? The fact is, it's impossible.
In a way, it's a shame that the blackout didn't happen because that for sure would have forced the issue from an angry populace?
I still can’t get my head around knowing that when the wind doesn’t blow (& it really doesn’t sometimes) we -us-those who foot the bills & will be doing so for generations to come - are paying for these enormous edifices of vanity - to sit there immobile as a reminder of our collective poverty.
The speed of this madness has overtaken any signs of common sense.