The UK’s renewable energy landscape just hit a major snag. Ørsted, the world’s largest offshore wind developer, has announced it is shelving the Hornsea 4 offshore wind project, a move that deals a significant blow to the country’s decarbonization goals. With a proposed capacity of 2.6 gigawatts (GW), Hornsea 4 would have powered over one million homes and contributed more than 5% toward the UK’s 2030 target of 50GW of offshore wind capacity. That vision is now looking far less attainable.
Today, the UK has around 15GW of operational offshore wind capacity. Another 4-5GW is currently under construction, and roughly 10GW is accounted for in either secured Contracts for Difference or received planning consent, but has yet to be built. Even when counting everything in the pipeline, the numbers fall short – and the cancellation of Hornsea 4 makes that shortfall even greater.
What’s driving this wave of retreat is a growing disconnect between government policy and market reality. The inflationary surge has led to rising supply chain costs, while interest rate hikes have increased the cost of financing. Compounding the issue, Contract for Difference strike prices have not kept pace with this new economic environment. As a result, projects that once looked viable on paper are now financially underwater.
Ørsted’s move to cancel Hornsea 4 comes with a projected loss of up to £513 million this year, and while the firm has retained the development rights, they’ve made it clear that the project will not move forward under current conditions. This is a major strategic retreat for an organization that has led the global offshore wind charge, and a signal that something fundamental must change if the UK is to stay on track for its climate goals.
The good news is that the UK’s offshore wind resource remains world-class. Hornsea 4, while halted for now, is still an approved and technically viable site. With the right policy signals, it could be revived. But to do so, the government must urgently adapt the current model. Reforming Contract for Differences to reflect real-world costs, enabling broader co-investment models to attract long-term capital, and strengthening domestic supply chains will all be essential steps. Without decisive action, the dream of clean power by 2030 will remain just that: a dream, slipping further out of reach.
