Ørsted commits to going ahead with Hornsea 3 offshore wind farm

Ørsted has taken a final investment decision on the Hornsea 3 wind farm in the North Sea.

With a capacity of 2.9GW, Hornsea 3 is expected to be the world’s largest single offshore wind farm when completed around the end of 2027.

It also is Ørsted’s third gigawatt-scale project in the Hornsea zone after the 1.2GW Hornsea 1, which came into operation in 2019, and the 1.3GW Hornsea 2, which followed in operation in 2022.

“By applying our world-leading capabilities within offshore wind innovation, engineering, operations, procurement, and financing, we’ve been able to mature the world’s largest offshore wind project and take final investment decision,” said Mads Nipper, Group President and CEO of Ørsted.

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“We look forward to constructing this landmark project, which will deliver massive amounts of green energy to UK households and businesses and will be a significant addition to the world’s largest offshore wind cluster.”

Ørsted was awarded a contract for difference (CfD) for Hornsea 3 at an inflation-indexed strike price of £37.35/MWh in 2012 prices in July 2022.

The CfD framework permits a reduction of the awarded CfD capacity, which Ørsted intends to use to submit a share of Hornsea 3’s capacity into the UK’s upcoming allocation round 6.

In a statement Ørsted says that based on a well-established supply chain and synergies with Hornsea 1 and 2, Hornsea 3 has a robust risk-reward profile and a value creation around the bottom end of the company’s targeted lifecycle project return range of 150-300 basis points on top of the weighted average cost of capital.

This reflects part of the capacity being awarded a CfD in the allocation round 6.

Ørsted also reports having all the major contracts for Hornsea 3 in place, including an agreement with Siemens Gamesa for SG 14-236 DD 14MW offshore wind turbines and to be the first and lead customer at SeAH Wind’s new monopile factory in Teesside.

Most of the capital expenditure for Hornsea 3 was contracted ahead of recent inflationary pressures, while the larger wind turbines and the synergies with Hornsea 1 and 2 lead to lower operating costs than the company has seen before in its portfolio, Ørsted has stated.

Hornsea 1 and the adjacent Hornsea 2 are located about 100km off the coast of Yorkshire with a cable connection to Grimsby.

Hornsea 3 is to be located to the east of Hornsea 1 and 2 about 160km off the coast and is expected to generate enough power to meet the average daily needs of 3.3 million UK homes.

In addition to Hornsea 3, Ørsted is assessing a Hornsea 4 with potential capacity up to 2.6GW adjacent to the northwest of Hornsea 2, for which the development has been consented.

With its addition an offshore wind cluster approaching 8GW would result.