Renewables

Major offshore wind projects shelved in another blow to industry

Major offshore wind projects shelved in another blow to industry

Photo: Bob Brewer on Unsplash

Published

May 9, 2025

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Published:

May 9, 2025

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Investors in offshore wind farms, especially European ones, are facing increasing losses – Ørsted decided to halt its Hornsea 4 project in the United Kingdom, while the United States stopped the construction of Equinor’s Empire Wind 1 facility.

After the energy crisis and the impact of Russia’s invasion of Ukraine, the resulting surge in inflation and the European industry’s weakening competitiveness, the offshore wind sector has suffered another blow from the drastic reversal of energy and climate policy in the United States. The administration of United States President Donald Trump turned against wind power, particularly offshore projects.

Meanwhile, China’s expansion in the sector is looking more and more like the case with solar power, where it has achieved absolute dominance on the global market. It is making it even more difficult for Western wind turbine producers and project developers to remain above water.

Ørsted announced that it is discontinuing its Hornsea 4 project in the United Kingdom “in its current form.” The Denmark-based developer and operator left the possibility of restarting the endeavor later “in a way that is more value-creating.”

The company won a contract for difference (CfD) at an auction in September for the 2.4 GW project, but it still couldn’t keep it afloat – financially, that is.

Hornsea 4 could have become the second-largest facility of its kind off European shores. The CfD is equivalent to GBP 83 per MWh in current prices.

Offshore wind expansion depends on potential returns for investors

Ørsted cited a continued rise in supply chain costs, higher interest rates, and an increase in the risk regarding the timeline. Group President and Chief Executive Officer Rasmus Errboe pointed out that the company made the move “well ahead of the planned final investment decision later this year.” He also mentioned adverse macroeconomic developments.

Breakaway costs are estimated at EUR 469 million to EUR 603 million, Ørsted said. It sees the impact on earnings before interest, tax, depreciation and amortization (EBITDA) at EUR 402 million to EUR 469 million. It includes a writedown of the offshore transmission assets and cancellation fees. The company expects to write down EUR 67 million to EUR 134 million in construction costs.

WindEurope: Costs can go up between bidding in an auction and procuring equipment, and auctions have to be fully indexed to reflect that

“The pause on Hornsea 4 shows how difficult it is to get offshore wind projects over the line. Costs can go up between bidding in an auction and procuring equipment, and auctions have to be fully indexed to reflect that. More broadly, the investors who make projects happen need a return,” WindEurope commented.

The association stressed that governments are responsible for making value achievable. “Then they’ll get the volumes they want,” the statement adds.

Empire Offshore project stopped in middle of construction in US

In probably the most drastic example of the offshore wind industry’s troubles in the US, the federal authorities forced Equinor to stop its Empire Offshore project last month. The Empire Offshore 1 segment, of 810 MW, was in the middle of construction! The Bureau of Ocean Energy Management (BOEM) ordered the halt pending a comprehensive review.

Notably, the Norwegian government-controlled company was developing the project under a contract with the State of New York. It is in a group of 17 US states and Washington DC which this week challenged, at a federal court in Massachusetts, Trump’s executive order on wind power.

At the end of March, Empire Wind had a gross book value of USD 2.5 billion, including South Brooklyn Marine Terminal, Equinor revealed. By that moment it drew USD 1.5 billion from the loan facility for the project.

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