It’s the kind of decision that sends shockwaves through an industry. Orsted, the global leader in offshore wind, has pulled the plug on Hornsea 4, a 2.4GW giant stated to be the centrepiece of the UK’s clean energy future. What’s more, the timing couldn’t be worse. Less than a week after the Reform party surged in local elections with an anti–net zero message, Orsted walked away from a Contract for Difference (CfD) it won just last year, saying the numbers no longer added up.
Hornsea 4’s collapse exposes the uncomfortable truth behind Britain’s 2030 clean energy ambitions: if the economics don’t work, even the most experienced players will walk. Now the UK faces a hole in its offshore wind pipeline, a nervous supply chain community, and big questions about whether the government’s policies are keeping pace with reality
In this article, we’ll tell you more about it.
Why Orsted pulled out
Hornsea 4 was supposed to be the final phase of a massive offshore wind complex off the Yorkshire coast, backed by seabed rights, a grid connection deal and full development consent. Orsted secured the project in Allocation Round 6 last September, with a strike price of £58.90 per megawatt-hour in 2012 money. This figure appeared low at the time. Now, with inflation, high interest rates and beleaguered supply chains, it’s no longer viable.
In its Q1 2025 results, Orsted announced it would halt spending on the project, cancel supply chain contracts and withdraw from the CfD agreement. It hasn’t shelved the Hornsea 4 idea forever, but it’s clear that without a substantially different economic model, it won’t be built anytime soon.
Of course, it’s not just Orsted facing these pressures. These issues are rife throughout the industry. Rising costs, risk premiums and elongated timelines are squeezing projects across the board.
What does this mean for 2030?
The UK government has a target to produce enough clean power to meet its annual electricity demand by 2030. The end of Hornsea 4 leaves this already ambitious goal in jeopardy.
Hornsea 4 accounted for more than half the fixed-bottom capacity secured in AR6. Its cancellation immediately creates a 2.4GW shortfall in the UK’s offshore wind pipeline. Analysts state the UK must now procure 14GW of low-carbon capacity by the end of the decade to stay on track. That’s assuming everything else goes to plan, which is a dangerous assumption.
This puts enormous pressure on Allocation Round 7. With Hornsea 4 out and the timeline slipping, AR7 is make or break. The failure of AR5, where many developers sat on their hands due to unattractive terms, casts a long shadow. Orsted’s move will only reinforce hesitancy unless the government addresses pricing and risk head-on.
The solution?
There’s precedent for salvaging projects. Hornsea 3, also threatened by economic headwinds, was paused in 2023 before being partially shifted into AR6, where better terms made it feasible again. But Hornsea 4 can’t take the same path—having withdrawn from AR6, it can’t return until AR8 at the earliest. That delay alone may kill the project’s chances of contributing to 2030 delivery.
Still, not all hope is lost. Industry experts note that there’s a queue of viable projects awaiting planning approval. If the government allows those without full consent to bid in CfD auctions, and if AR7 terms are significantly improved, the target may yet be within reach. Technically, it’s possible. Politically and economically, it’s a tightrope.
What’s next?
Orsted’s move is a reality check. One of the most experienced, well-resourced offshore wind developers in the world has said that a deal they made doesn’t work. That should rattle Westminster.
The government insists it still has a strong pipeline and will work with Orsted to find a way forward. But unless that translates into rapid adjustments, including clearer auction terms, a resolution on controversial zonal pricing plans, and credible plans for investment support, the pipeline could shrink rapidly.
2030 is still in reach, but the sector is looking for answers. If developers continue to walk away, the target will be missed by a long way, which is no good for anybody. We hope to see a swift resolution soon.