Ørsted has officially given the green light for the construction of Hornsea 3, the world’s largest offshore wind farm, following its final investment decision (FID). Anticipated to boast a formidable capacity of 2.9 GW, Hornsea 3 is slated for completion by the close of 2027, marking Ørsted’s third venture of this magnitude in the Hornsea zone, succeeding Hornsea 1 (1.2 GW) and Hornsea 2 (1.3 GW).
Positioning the UK as a pivotal market, Ørsted underscores its commitment with 12 operational offshore wind farms in the region, leveraging robust political backing and ambitious growth objectives. Having secured a Contract for Difference (CfD) in July 2022 at a strike price of GBP 37.35 per MWh, Ørsted will exercise flexibility in submitting a portion of Hornsea 3’s capacity in the upcoming Allocation Round 6.
Hornsea 3’s risk-reward profile is reinforced by a well-established supply chain and synergies with Hornsea 1 and 2. With major contracts in place, including an agreement with Siemens Gamesa for 14 MW turbines, Ørsted expects lower operating costs due to economies of scale. The project contributes significantly to the UK’s renewable energy landscape, generating thousands of jobs and substantial investments in the offshore wind supply chain.
Envisioned as a cornerstone in the UK’s energy security strategy, Hornsea 3, with its 2.9 GW capacity, is set to power over 3.3 million homes. The project will foster employment, supporting up to 5,000 jobs during construction and an additional 1,200 permanent positions in the operational phase. Ørsted’s strategic supplier contracts, including a milestone deal with SeAH Wind, reinforce its commitment to the UK’s renewable sector.
Situated 160 km off the Yorkshire coast, Hornsea 3, when combined with Hornsea 1 and 2, will create the world’s largest offshore wind zone, with a total capacity exceeding 5 GW. The forthcoming Hornsea 4 project, with a potential 2.6 GW capacity, adds to this ambitious portfolio, having received government approval and eligibility for future CfD allocation rounds.
Ørsted’s comprehensive approach includes building transmission assets, which will be divested to a new owner in compliance with UK regulations after Hornsea 3 is fully commissioned. The CfD, spanning up to 15 years post-commissioning, ensures a stable income with an inflation-indexed strike price. Upon conclusion, Hornsea 3 will either receive market prices for electricity or engage in new power purchase agreements.
Despite these groundbreaking developments, Ørsted’s previously communicated EBITDA guidance for 2023 remains unchanged at DKK 20-23 billion, excluding considerations for new partnership agreements and provisions related to Ocean Wind 1.