Orsted says mega Hornsea 3 North Sea wind farm project will proceed

By Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) -Orsted said on Wednesday it had made a final investment decision (FID) on the massive wind farm Hornsea 3 off Britain’s coast, indicating it will proceed and sending shares in the troubled renewable energy company higher.

The world’s largest offshore wind farm, which will have capacity to power more than 3.3 million UK homes and is expected to cost around 8 billion pounds ($10.1 billion), is targeted for completion by the end of 2027.

The 2.9-gigawatt project is seen as vital for Britain’s push to boost energy security and its renewable power output to meet climate targets.

The decision comes after several developers have cancelled projects in Britain and the United States this year as soaring costs made them unprofitable.

Shares in Orsted, which have more than halved this year after massive writedowns on U.S. projects, rose as much as 5% on the news, and were trading 3.7% higher at 1455 GMT.

Orsted said Hornsea 3 has a value creation “around the bottom end” of its targeted return on projects.

Development of the Hornsea 3 project had been in doubt due to rising upfront costs, as the industry grapples with supply chain delays and higher costs.

Orsted said in March it needed more support from the government, such as tax breaks, to proceed with the project.

Governments have shown more willingness in recent months to pay higher prices for offshore wind, a renewable energy source that would help them cut emissions and reach climate targets.

Still, Orsted, the world’s biggest developer of offshore wind, last month halted the development of two U.S. offshore wind projects and said related impairments had surged above $5 billion.

“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,” Orsted CEO Mads Nipper said in a statement.

The project is part of a wider array at the Hornsea site off the Yorkshire coast. Orsted put Hornsea 1 and 2 into operation in 2020 and 2022, respectively.

($1 = 0.7895 pounds)

(Reporting by Jacob Gronholt-Pedersen, editing by Terje Solsvik and Bernadette Baum)