Ørsted has made a final investment decision for Hornsea 3, an offshore wind farm in the United Kingdom with a capacity of 2.9 gigwatts, which will reportedly be the largest of its kind in the world.
The project will be the third of the company’s gigawatt-scale offshore wind projects located off the U.K.'s east coast. Hornsea 1 and Hornsea 2, which generate 1.2 GW and 1.3 GW of energy, respectively, are currently in operation and together power more than 2 million U.K. homes. On its own, Hornsea 3 will produce enough renewable energy to power over 3.3 million in the country.
Ørsted received a contract for difference in July 2022 for Hornsea 3, including an inflation-indexed strike price of $47.39 per megawatt hour in 2012 prices. The company will reportedly submit a share of Hornsea 3’s capacity into the U.K.’s allocation round 6, allowed by the financial framework. The company has also entered an agreement with Siemens Gamesa for its offshore wind turbines that will reportedly allow for lower operating costs.
The project is expected to support up to 5,000 jobs during construction and will support 1,200 permanent jobs once the project is commercially operational. The company has also announced several supplier contracts, including one with SeAH Wind that will support wind-powered steel manufacturing at its monopile factory in Teesside.
“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 Ørsted CEO Mads Nipper. “Offshore wind is an extremely competitive global market, so we also welcome the attractive policy regime in the U.K. which has helped secure this investment. We look forward to constructing this landmark project, which will deliver massive amounts of green energy to U.K. households and businesses and will be a significant addition to the world’s largest offshore wind cluster.”
Offshore wind development has faced a number of obstacles in the last year, with reports showing a significant decline in wind investment due to high costs and permitting challenges, with many of Ørsted's projects in the United States losing traction. The U.K. has faced similar challenges in 2023, experiencing what a Bloomberg report calls a “crisis year” for its offshore wind industry.
The Hornsea 3 project could mark a turning point, and a necessary one as offshore wind is a key piece of the U.K.’s decarbonization strategy. The country aims to supply all of its electricity from renewable sources by 2035, with plans to install up to 50 GW of offshore wind capacity in the process.
Hornsea 3 is expected to be commissioned by the end of 2027 and is considered a vote of confidence in the U.K. market for offshore wind, according to Ørsted.
