Ørsted Approves Final Investment Decision for Hornsea 3 Offshore Wind Farm
Plans for the world’s largest offshore wind farm have taken a major step forward today, with Ørsted announcing that it has made the final investment decision to proceed with the Hornsea 3 project in the North Sea, despite ongoing economic challenges in the global and national wind energy sector.
The Danish energy giant confirmed today that it has approved its financial plan to execute the 2.9 GW project, which will mark the third phase of the offshore wind farm following the delivery of the existing Hornsea 1 development of 1.2 GW and Hornsea 2 of 1.3 GW.
In total, the three phases will comprise 5 GW of offshore wind power capacity, while Ørsted is also tentatively considering a fourth phase that could increase that total to over 7 GW.
Located 160 km off the coast of Grimsby, where Ørsted’s operations and maintenance hub for offshore wind farms is based, the development of Hornsea 3 is estimated to be able to provide enough electricity to power over 3.3 million average UK households once completed in 2027.
The Hornsea 3 phase, which will be comprised of Siemens Gamesa’s massive SG14-236DD turbines with a capacity of 14 MW, is also expected to generate up to 5,000 construction jobs, in addition to another 1,200 permanent jobs in its supply chain and operation phase.
The announcement is a major Christmas boost for the UK offshore wind sector, which has been plagued by economic and supply chain challenges that have seen several high-profile projects put on hold in recent months.
The government’s recent clean energy subsidy auction round also failed to attract Contracts for Difference (CfD) bids for offshore wind projects amid rising development costs in the sector, prompting the government to increase its auction price for next year’s allocation round.
Ørsted said that the majority of the capital expenditure for Hornsea 3 had already been contracted «prior to recent inflationary pressures», meaning it was able to secure «competitive prices» from the offshore wind supply chain to enable the project to proceed.
Duncan Clark, UK and Ireland Country Manager at Ørsted, said that the UK remains a key market for the company, and cited the government’s strong support for the offshore wind industry, which aims for 50 GW of capacity by 2030, up from around 14 GW at present.
«Hornsea 3 will be a cornerstone in achieving the UK government’s climate and clean energy goals, while increasing energy independence and creating local jobs,» stated Clark. «Our decision to build Hornsea 3 is a vote of confidence in the UK offshore wind market as we continue to invest significantly in UK clean energy infrastructure and the UK supply chain.»
The third phase of the Hornsea offshore wind farm previously received a 15-year CfD from the UK government at an inflation-indexed strike price of £37.35 per MWh at 2012 prices.
Ørsted said it would use the flexibility built into the CfD – which allows for a reduction in the contracted capacity – to bid a portion of Hornsea 3’s capacity into the upcoming sixth allocation round for CfDs in the UK next year.
Once Hornsea 3 is built, including onshore and offshore transmission stations for the project, Ørsted said it would sell the transmission assets to a new owner, in line with UK regulations.
Mads Nipper, CEO of Ørsted, said that within an «extremely competitive global market» for offshore wind energy, he welcomed the UK’s attractive policy regime in helping secure the company’s investment in Hornsea 3.
«We look forward to building this landmark project, which will deliver massive amounts of green energy to UK homes and businesses and be a significant addition to the world’s largest offshore wind energy cluster.»
Ørsted’s decision to proceed with the project despite recent economic challenges is a testament to the improved political support offered by the UK government in recent months following the «disappointing» results of the last CfD auction for offshore wind energy, according to RenewableUK.
The trade body’s CEO, Dan McGrail, described the Danish energy giant’s «historic decision» as a «huge vote of confidence in the cutting-edge UK offshore wind industry.»
«To put this into context, Hornsea 3 has more than double the capacity of the world’s largest operational offshore wind farm, Hornsea 2, so this represents a major step forward in terms of scale,» he stated.
«The announcements made by ministers in the past two months about more sustainable administrative strike prices, permanent total spend for green tech investors, and funding to support clean energy manufacturing in the UK are putting us back on track to make Britain one of the most attractive countries for international investors in offshore wind energy.»