by David Turver
Today, Orsted has announced that it is pulling out of its flagship 2.4 GW Hornsea Project Four offshore wind farm that was granted a contract only last year in AR6. It said:
After careful consideration, we’ve decided to discontinue the development of our Hornsea 4 project in its current form, well ahead of the planned FID later this year. The combination of increased supply chain costs, higher interest rates and increased execution risk have deteriorated the expected value creation of the project.
Orsted’s statement comes just a day after Ed Miliband announced the results of his consultation into Contracts for Difference (CfDs) for Allocation Round 7 (AR7) and committed to changes to deliver more offshore wind capacity. The DESNZ announcement said that 31 GW of offshore wind capacity has been constructed or contracted and at least 12 W of offshore wind capacity needs to be secured in AR7, AR8 and AR9 to meet its 43-50 GW target by 2030. Now 2.4 GW of that 31 GW has been removed from the pipeline.
Hornsea 4 made up the bulk of the 3.4 GW of the new offshore wind capacity awarded in AR6, so its removal is a big blow to Miliband’s Clean Power 2030 plan. In fact, the NESO target for offshore wind in 2030 is 50.7 GW, so until today almost 20GW was required from the new allocation rounds. Now 22.1GW is required. Moreover, as we discussed last month, Miliband is already falling short of his target.
Miliband has agreed to publish the budget for AR7 much later than normal and is giving himself powers to see anonymised bid information on prices and capacity before announcing the budget. It is interesting that he made no announcement about the proposal to increase the contract term from 15 to 20 years and there is still no news on the Administrative Strike Prices.
However, today’s news from Orsted means he cannot rely upon projects getting built even if he awards contracts. And of course, this news comes after Norfolk Boreas was cancelled last year after being awarded a contract in AR4 in 2022. Moreover, parts of other AR4 projects were rebid at higher prices in AR6, such as Moray West and Inch Cape. Orsted’s Hornsea Project Three has even been awarded contracts for more capacity than is being built.
If we cannot rely upon either the capacity being delivered nor the price being honoured then the whole Allocation Round process has become a farce. It is time for Miliband to declare that his Clean Power 2030 plan is dead. It is no more, it has ceased to be, it’s expired and gone to meet its maker.
David Turver writes the Eigen Values Substack, where this article first appeared.
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Things are looking up!
Not sure about that, Mad Ed is a believer and I’m sure TTK will let him do far more damage until reality hits.
Maybe the reality of offshore wind is finally coming home to roust Even with a massive price uplift telegraphed by Miliband it was not enough to convince Orsted there was money to be made in offshore wind in the North Sea. The wear rates of components and the limited window of access to service turbines out at sea is a real issue. Add to that the cost of specialist engineers having to be paid, for their scarcity and before you know it only Indian companies employing Indian engineers will be able to make it pay. Thanks to Kier Starmer’s government he has lifted the cost of employee tax from all Indian companies operating in the UK employing flown in/migrant Indian workers for three years.
Can’t wait for the next round of who is building offshore turbines…..
My guess is it’s mostly finance costs, the projects over the last 10 years or so have progressed based on basically free money, now that finance costs are 2 – 3 times what they were in 2022 they no longer make sense at any kind of realistic strike price.
roost, not roust.
I get downvoted when I do that.
“this is an ex-wind farm. It wouldn’t vumf if you put 4 million quid into it.”. Monty Python were so ahead of their time. 😁
Beautiful plumage! Until it hit the turbine blades…
Comedians are usually ahead of the game, they have higher IQ. The exception to this rule is mad Ed, the greatest comedian on the planet.
The Wind Farm Collapse: Just Look at the Numbers
For all the hype around wind energy, the reality is hard to ignore: wind farms are being cancelled in droves, and the numbers are piling up like abandoned turbines in a scrap heap.
In the United States alone, over 10 major offshore wind projects have been delayed, downsized, or cancelled entirely since 2022. Developers like Orsted, BP, and Equinor have walked away from contracts worth tens of billions of dollars, citing “unforeseen costs”—translation: the math never worked in the first place. In New Jersey, two massive offshore wind projects—praised by politicians and green lobbyists—were abruptly scrapped in 2023 after hundreds of millions had already been sunk into planning and PR.
It’s not just offshore. In the UK, a major wind power auction in 2023 attracted zero bids—a full-blown embarrassment—because even the industry knows these projects aren’t viable without endless government handouts. Across Europe, wind developers are scaling back or cancelling planned installations due to inflation, permitting nightmares, and public backlash.
And the trend is global. Germany, Denmark, and Sweden—all once leaders in wind energy—are seeing project cancellations and declining investments. China, the world’s biggest wind builder, is quietly shifting toward other energy sources after hitting reliability limits.
Bottom line: the cancellations aren’t isolated—they’re a wave. Wind energy is collapsing under the weight of its own promises. The numbers don’t lie. The so-called “renewable revolution” is spinning itself into the ground.
Oe can hope.
Ding dong the witch is dead
Orsted. Formerly known as Dong Energy. Danish oil and natural gas.
“increased execution risk” ——> we have to admit we bought into our own highly optimistic assumptions of future costs when marketing this project to funding bureaucrats. Ooops.
“Call me brother,
All the while back stabbing me;
Sister, mother,
Some of these in misery
It’s only money,
And money don’t satisfy
My wine to water,
Yes, my gold you turned to dust
Go to your altar
We not forgive where evil must
It’s only money,
And money don’t satisfy” – It’s only money, Robin Trower
But our suffering does
Mad Ed has another wheeze
Every new car park may have to be covered with solar panels https://www.thetimes.com/uk/environment/article/every-new-car-park-may-have-to-be-covered-with-solar-panels-tv90h3jmz
But how many ‘new’ car parks are going to be built? However, all new houses must now have solar panels. I guess they will have noisy heat pumps too, even though you can’t pump heat.
Can’t trap heat either.
For the last ten days here in UK 25GW faceplate of windmills as been producing 4GW or less. SO HOW is Net Zero supposed to
happen? Aviation? Shipping? Road haulage? Agriculture? Construction? Madness
Build an inter-connector to Russia to fix that, what could possibly go wrong.
Germany did it with gas so you are just playing catch up.
You have to first shoot yourself in foot then fix it by cutting the whole leg off 🙂
In steps. First the ankle, then the knee…..
And this ‘clean power’ thing is a lie. It only gets traction because commentators are so STUPID. With Net zero – what has been cleaned? Just the efflux from a few gas power stations. Are they ‘dirty’? Sue them then
After careful consideration, we’ve decided to discontinue the development of our Hornsea 4 project in its current form, well ahead of the planned FID later this year. The combination of increased supply chain costs, higher interest rates and increased execution risk have deteriorated the expected value creation of the project
______________________________________________________
They left off:
Besides, it was really stupid!
Because we want more free money.
Calculated blackmail does look to be the reality here. Certainly not giving up on all those lovely CfDs and ARs. They just need more subsidy.
Not quite. Because the losses greatly exceeded the more free money.
It’s a dead parrot, in other words.
It’s tired and shagged out after a long squawk.
https://youtu.be/I8nMv6jEmCs
Sovereign risk is mounting for backers of weather dependent generators. Trump is leading the charge against them but Farage is a present threat to UK developers.
No generator should be permitted to connect to the grid unless they can guarantee supply to rated capacity at any time with at least 95% availability.
And guarantee stable synchronous supply.
You mean attack grid dumping like Trump’s tariff play with China and their transhippers? Don’t we have to contextualise dumping whereby some dumping is more equal than others?
the problem is that they achieve this on paper by hijacking the emergency generators of hospitals. their door to door salesman go to every venue with an meergency generator and ask them to sign up as standby generators for when their is no wind. the problem is an emergency generator is not a standby generator and if it is used as one, it is likely to fail in emergency.
another trick is to use containerised back up generators which are sized so as to not need to meet strict emissiopn regulations.
This should give the climate caterwaulers something to caterwaul about!
They’re self-flagellating as we speak
I am looking forward to Nick Stokes’ attempt to spin this as positive news for fans
of Renewable Energy like him.
They are just sparing the free wind they would have used for someone else to use.
The wind is free. The cost of gathering energy from it, to use typical British understatement, GIGANTIC.
Don Quixote
The combination of increased supply chain costs, higher interest rates and increased execution risk have deteriorated the expected value creation of the project.
That’s good to hear because all those sea cranes and infrastructure are urgently required waaaaaaay down South in Oz for Minstrel Bowen’s first of many offshore wind turbine factories to bring down our power bills and change the weather.
I think you mean “to rapidly increase our power bills and do nothing about the weather, which isn’t getting worse anyway.
Does Australia have a bureau for whale body disposal yet?
More good news. Fire up all fossil fuel and nuclear generators. Build new fossil fuel and nuclear generators. Remove all wind and solar from the grid.
Nah just demand a level playing field like RickWill points out to expose their ‘fickles are cheaper’ big lie. They have to lie because they can’t fess up to all the rooftop solar owner/voters they have a massive fallacy of composition problem because of their wilful ignorance.
Level playing field. If those atrocities are as good as claimed, they will dominate in a free market.
Subsidies put a thumb on the scale. Policies create command economics, which is not a free market.
More slushfunding for Draxula for your fickles water battery or we don’t play stoopids-
Power station pause a net zero blow for SNP
Windmills…
+1,000
😂 🤣 😅 😆
Another fairy tale ending.
Not dead. The scuttlebutt is that Ed will cook up a special deal with Orsted to enable a go-ahead. The headline is the amount of power produced from this field will power a million home (on a good day) but the rest of the time will mean the grid operator will have to call on reserve gas powered generation, latency not considered, potential for blackouts. Why do we continue to fall for this sort of narrative, the difference between potential and actual?
Of course this will be bad news for consumers, even more subsidy blowing in the wind. Do these maniacs not consider that, as in the USA, the end of this pursuit is only a regime change away? The false narrative that Brits suffer the tale about reliance on fuels from nasty regimes will be expunged, in favour of green clean sovereign supplies. Britain sits on fossil fuel reserves that would remove that reliance. All the infrastructure is already in pace, reliance assured.
Starmer now finds himself in a very difficult position – the political costs of all the alternatives are disastrously high.
The political cost of a U-turn, not to mention the financial cost, would be huge. And much higher than those of the ongoing U-turn by the Conservatives = its always much easier to do a U-turn on policy if you are not in power.
A U-turn would be a completely different energy policy – it would involve no more tenders, cancelling AR7. But it would also mean stopping the hugely expensive transmission buildout, which is intended to bring the output of the wind farms in the North Sea and off the north coast of Scotland down to the South East and Midlands where demand is.
Then it would mean building out new gas plant as fast as possible. But what would you do with the existing wind, and the contracts? And the constraint payments?
And then there’s the electric car issue. Do a U-turn on that? And the heat pump policy.
He needs to fire Miliband also, to be able to do any of this. But Miliband is the darling of the left. The Labour Party never deposes its leaders. But firing Miliband for a U-turn on what the left media and establishment keep mis-representing as ‘climate action’ might make his position untenable. He would also have to repeal or heavily dilute the Climate Change Act. Would he get a Parliamentary majority to get it through?
OK, you keep on keeping on. But what is visibly coming towards you in that case is blackouts and rising prices. Rising prices because the cancellations and no-bids show that the only way you are going to get wind installed in the required quantities is at far higher prices than today’s. Blackouts because even in this scenario there is no adequate provision to deal with intermittency and inertia. And probably rationing with it, because you are at the same time moving everyone to heat pumps and EVs, and there will just not be enough power.
The likely result of all this, as he twists and turns, is going to be a series of compromises. The EV mandate and penalties get reduced and finally allowed to die, the heat pump effort is largely abandoned, more gas generation is installed. AR7 and later result in much higher prices. Miliband remains in place. The useless transmission build out continues.
The UK ends up with the worst of both worlds, even higher prices than today coupled with unreliable supply. But it gets worse.
Energy policy on this scale does not happen in a vacuum. The only way it can be financed at any bearable political cost will be debt. So the end scenario will be an old fashioned financial crisis – the bond market will refuse to lend except at prohibitive interest rates, inflation will take off, sterling will collapse, and the public sector unions will strike as they did in the last century.
The question for Farage is will all this happen soon enough for him. He is not a spring chicken, and beer and cigarettes on his scale will take a toll one day. I am not sure. I think there is some reasonable chance that there may be a crisis in the next four years. Enough of one to decisively impact the next election.
But whether or not it happens in the next four years, carrying on as now means in the end not only blackouts and high prices, but toast for the pound. They are pursuing an unviable energy policy, and both the markets and the public are going to exact the highest of prices for it one way or the other.