Ørsted's surprising decision to terminate the contract for the Hornsea 4 offshore wind project in the UK may prove to be economically advantageous. According to the research house Aegir Insight, the project could become much more attractive if the decision to implement it is simply postponed for a few years. This is reported by Finans.
- Compared to the potential upside that is waiting and perhaps getting higher CfD support, it is peanuts that have to be paid in fines here and now. There may therefore be a significant advantage in postponing the project to a later tender round, says Rikke Nørgaard, commercial director at Aegir.
Ørsted has previously obtained the necessary permits for the project and therefore does not risk having to start from scratch. It is only the specific contract on support and schedule that the company has chosen to lapse. In the UK, it is possible to do this without a significant financial penalty. Instead, it gives access to potentially higher support in future tenders, where, for example, the interest rate level may be lower.
However, the British support system means that Ørsted is now excluded from the next two tenders. This means that Hornsea 4 can receive a new contract in 2027 at the earliest – and only if the British authorities maintain one annual tender round. A change in the rules is considered unlikely. Ørsted itself has declined to comment on the analysis from Aegir Insight, but CEO Rasmus Errboe explained in an investor call that the decision is due to high interest rates and rising costs. However, he stressed that the project is not for sale and that the Hornsea zone remains strategically important for Ørsted.
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