Final investment decision on Hornsea 3 Offshore Wind Farm
London, 21 December 2023, (Oilandgaspress): – Ørsted has taken final investment decision (FID) on the world’s single largest offshore wind farm, Hornsea 3, which will have a capacity of 2.9 GW and is expected to be completed around the end of 2027. Hornsea 3 will be Ørsted’s third gigawatt-scale project in the Hornsea zone following Hornsea 1 (1.2 GW) and Hornsea 2 (1.3 GW), which are already being operated out of Ørsted’s operations and maintenance hub in Grimsby.
The UK is a core market for Ørsted and one of the world’s largest markets for offshore wind, building on strong political support and ambitious build-out targets. Ørsted currently operates 12 offshore wind farms in the UK.
In July 2022, Ørsted was awarded a contract for difference (CfD) for Hornsea 3 at an inflation-indexed strike price of GBP 37.35 per MWh in 2012 prices. The CfD framework permits a reduction of the awarded CfD capacity. Ørsted will use this flexibility to submit a share of Hornsea 3’s capacity into the UK’s upcoming allocation round 6.
Based on a well-established supply chain and synergies with Hornsea 1 and 2, Hornsea 3 has a robust risk-reward profile and a value creation around the bottom end of our targeted lifecycle project return range of 150-300 basis points on top of our weighted average cost of capital. This reflects part of the capacity being awarded a CfD in Allocation Round 6. The possible future addition of Hornsea 4 would create an offshore wind cluster in excess of 7 GW and unlock further cluster synergies.
We have all major contracts for Hornsea 3 in place, including an agreement with Siemens Gamesa for SG 14-236 DD offshore wind turbines, which have a capacity of 14 MW excluding power boost. Most of the capital expenditure for Hornsea 3 was contracted ahead of recent inflationary pressures, securing competitive prices from the supply chain and allowing time to work collaboratively on value creation opportunities. The larger wind turbines and the synergies with Hornsea 1 and 2 lead to lower operating costs than we have seen before in our portfolio.
Hornsea 3 will provide low-cost, green energy for the UK and deliver thousands of high-quality jobs and billions of pounds of investment in the UK’s offshore wind supply chain. Hundreds of companies are lined up to play a role in the construction and operation, supply, installation, commissioning, and long-term operation and maintenance of the wind farm.
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