Ørsted said this week that it had made a final investment decision on the Hornsea 3 project off Britain’s coast, indicating it will proceed with what will become the world’s largest offshore wind farm.
The project, which will have capacity to power more than 3.3 million UK homes and is expected to cost 70-75 billion Danish crowns ($10.3-$11.0 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. Orsted said Hornsea 3, which is part of a wider array at the Hornsea site off the Yorkshire coast, has a value creation “around the bottom end” of its targeted return on projects. Bernstein analysts projected the internal rate of return at 7-7.5%.
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.
Most of the capital expenditure for the project was contracted ahead of recent inflationary pressures, securing competitive prices, Orsted said.