The end of Hornsea 4 windfarm announced by Ørsted yesterday has sent a shockwave around the offshore wind sector. It’s also severely dented the government’s green ambitions.
The Danish energy giant said the numbers just didn’t stack up to continue developing the 2.4 gigawatt Hornsea 4 wind farm “in its current form” and they were pulling out because of rising supply chain costs and higher interest rates.
The decision will cost Ørsted up to £500 million which will be written off.
Despite this DESNZ has said it believes the project is not dead, a spokesperson said:
“We recognise the effect that globally high inflation and supply chain constraints are having on industry across Europe, and we will work with Orsted to get Hornsea 4 back on track.
“We have a strong pipeline of projects to deliver clean power by 2030 and our mission-led approach ensures we can steer our way through global pressures and individual commercial decisions to reach our targets.”
Stop mad dash
Conservatives have said the decision, which follows recent doubts from many including Tony Blair on the costs of net zero, shows Labour are obsessed with rhetoric and not economics.
Shadow Scottish Secretary Andrew Bowie said: ‘Once again, the full cost of Labour’s Net Zero madness is on stark display.
‘We have been consistently warning this government that their mad dash to net zero is simply not sustainable – and would leave investment and industry at risk – but Keir Starmer and Ed Miliband have buried their heads in the sand, even as another key infrastructure project has pulled the plug.
‘Kemi Badenoch and the Conservatives have been clear about the true costs of net zero by 2050. Will the government ever do the same?’
Zonal pricing
And RenewableUK’s Deputy Chief Executive Jane Cooper said the decision meant the government should definitely now rule out zonal pricing.
“The unique cost pressures faced by Hornsea 4 have led to a rethink on this particular project and we need to do everything we can to keep a stable market for all other projects going forward.
“We urge the Government to remove uncertainty for investors in this year’s auction for new clean power projects by ensuring auction parameters reflect the cost increases we’re seeing in the supply chain and inflationary pressures. Additionally, Government should rule out the introduction of zonal pricing which would drive the cost of investment up even further”.
However environmental groups have said Labour need to commit more resources to develop British supply chains at lower costs.
Greenpeace UK’s head of climate, Mel Evans, said:
“This is why the government must double down on its commitment to clean power and invest heavily in domestic wind manufacturing.
“This would help to overcome the supply chain issues faced by companies like Ørsted and lower costs, which would be good for the government’s clean power plan, good for jobs and good for Britain.”
