UK's net zero ambitions fade amidst Hornsea 4 setback

Commenting on Orsted’s decision to cancel plans for the Hornsea 4 offshore windfarm, Sheena McGuinness, Head of Renewables and Cleantech at RSM UK, said: “The UK’s ambition for net zero has suffered a major setback with the cancellations of Hornsea 4. While announcements of investment in clean energy are often surrounded by fanfare, the quiet retreat of such projects seldom receive much scrutiny. Clean energy has been identified as a growth-driving industry, but to realise the government’s growth ambitions, businesses need secure investment to drive innovation, scale renewable technologies, and develop the infrastructure required to secure the UK’s position as a global leader in renewables.

“Despite the setback, Orsted has placed the project on hold, with plans to reassess its viability if supply chain tensions and economic conditions improve. Floating offshore wind projects are often on a merchant risk basis, meaning they take the risk of fluctuating electricity prices on the wholesale market. In addition, the cost of development of floating offshore wind projects is prohibitively high at present, but with continued investment and advances we will likely see the same trend as fixed offshore wind with the costs decreasing over time. Comparing this energy source with nuclear, which also requires substantial upfront capital investment, with further expensive decommissioning costs, nuclear receives government subsidies to make this viable, including guaranteed energy purchase prices.”

“That being said, there are new UK initiatives, such as the £50m Supply Chain Accelerator Fund and Crown Estate’s commitment to leasing 20-30GW of offshore wind seabed by 2030. These are helpful but will not move the dial on high development and rising supply chain costs, as well as price volatility risks. Star layout turbines are gaining traction for cost efficiency and operational simplicity, which will help to de-risk projects. However, it looks like this is too little too late for Hornsea 4, at least for the immediate future”.

She added: “Without government intervention, more renewables projects risk being scrapped, turning the ambitious target to quadruple the UK’s offshore wind capacity by 2030 into little more than a pipe dream. Aside from the Industrial Strategy, the government needs to remove uncertainty for investors in the upcoming auction for new clean power projects and provide transparency on the rising supply chain costs affecting these developments.”