Ørsted has announced it is discontinuing the Hornsea 4 offshore wind project in its current form.

The Hornsea 4 project – a proposed 2,400 MW,180 turbine development 69km off the Yorkshire Coast – secured backing from the government’s Contract for Difference (CfD) award in allocation round 6 (AR6) in September last year.

But Ørsted said it had seen “several adverse developments” relating to continued increase of supply chain costs, higher interest rates and an increase in the risk to construct and operate Hornsea 4 on the planned timeline for a project of this scale.

Ørsted has taken the decision to stop further spend on the project and terminate the project’s supply chain contracts, meaning that it will not deliver Hornsea 4 under the CfD awarded in AR6.

The company said it will evaluate options for future development of the Hornsea 4 project given the continuing seabed rights, grid connection agreement and Development Consent Order.

Rasmus Errboe, group president and CEO of Ørsted, said: “We remain fully committed to being an important partner to the UK government to help them achieve their ambitious target for offshore wind build-out and appreciate the work they’ve done to deliver a clear framework to support offshore wind.

“However, our capital allocation is based on a strict and value-focused approach, and after careful consideration, we’ve decided to discontinue the development of the Hornsea 4 project in its current form, well ahead of the planned Final Investment Decision later this year.

“We’ve been maturing the project over the past nine months and have been working relentlessly with stakeholders and suppliers to manage the different project risks for a project of this scale.

“Throughout the development phase we’ve been very diligent in our approach to capital commitment to our suppliers, and our committed capital is well below our threshold. The adverse macroeconomic developments, continued supply chain challenges, and increased execution, market and operational risks have eroded the value creation.”

He added: “I’d like to emphasise that Ørsted continues to firmly believe in the long-term fundamentals of and value perspectives for offshore wind in the UK. We’ll keep the project rights for the Hornsea 4 project in our development portfolio, and we’ll seek to develop the project later in a way that is more value-creating for us and our shareholders.”

Ørsted is currently working on the Hornsea 3 Offshore Wind Farm, which will deliver enough green energy to power more than three million UK homes. An £8.5bn infrastructure project, it is located in the North Sea, around 120km off the Norfolk coast and 160km off the Yorkshire coast.

The area has already seen the launch of Hornsea 1 in 2020 and Hornsea 2 in 2022.