REG-Ørsted A/S Ørsted takes final investment decision on Hornsea 3 Offshore Wind Farm

Oersted A/SAnnouncement

20/12/2023 14:00

============

   Ørsted A/S (Orsted)
   Ørsted takes final investment decision on Hornsea 3 Offshore Wind Farm

   20-Dec-2023 / 14:46 CET/CEST

   ══════════════════════════════════════════════════════════════════════════

   20.12.2023 14:46:10 CET | Ørsted A/S | Inside information

   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.  

   Mads Nipper, Group President and CEO of Ørsted, said: “By applying our
   world-leading capabilities within offshore wind innovation, engineering,
   operations, procurement, and financing, we’ve been able to mature the
   world’s largest offshore wind project and take final investment decision.
   Offshore wind is an extremely competitive global market, so we also
   welcome the attractive policy regime in the UK which has helped secure
   this investment. We look forward to constructing this landmark project,
   which will deliver massive amounts of green energy to UK households and
   businesses and will be a significant addition to the world’s largest
   offshore wind cluster.” 

   Duncan Clark, Head of Ørsted UK & Ireland, said: “Hornsea 3 will be a
   cornerstone in achieving the UK government’s climate and clean energy
   targets while increasing energy independence and creating local jobs. Our
   decision to build Hornsea 3 is a vote of confidence in the UK market for
   offshore wind, as we continue to invest significantly in UK clean energy
   infrastructure and in the UK supply chain.”

   Facts about Hornsea 3
   With a capacity of 2.9 GW, Hornsea 3 will produce enough low-cost,
   renewable electricity to power more than 3.3 million UK homes, making a
   significant contribution to the UK government’s ambition of having 50 GW
   offshore wind in operation by 2030 as part of the British Energy Security
   Strategy. 

   Hornsea 3 will support up to 5,000 jobs during its construction phase,
   with up to a further 1,200 permanent jobs both directly and in the supply
   chain in the long operational phase. Hornsea 3 will be operated from
   Ørsted’s operations and maintenance hub in Grimsby. 

   Ørsted has already announced a series of significant supplier contracts –
   including an agreement for Hornsea 3 to be the first and lead customer at
   SeAH Wind’s monopile factory in Teesside, underpinning SeAH’s investment
   decision to establish a new, globally competitive monopile factory in the
   UK.  

   Hornsea 3 is located 160 km off the Yorkshire coast. When the wind farm
   comes online, Ørsted’s Hornsea trio – comprising Hornsea 1, 2, and 3 –
   will have a total capacity of in excess of 5 GW, making it the world’s
   largest operating offshore wind zone.

   The Hornsea zone will also include Ørsted’s Hornsea 4 project, which could
   have a capacity of up to 2.6 GW. Hornsea 4 received its development
   consent order from the UK government earlier in 2023 and is now eligible
   for forthcoming CfD allocation rounds.

   Ørsted will build Hornsea 3, including transmission assets (offshore and
   onshore substations and export cables). When the wind farm has been fully
   commissioned, Ørsted will, in accordance with UK regulation, divest the
   transmission assets to a new owner.

   The CfD for Hornsea 3 runs for up to 15 years starting after commissioning
   of the wind farm, which is expected around the end of 2027. The strike
   price is inflation-indexed up to and throughout the CfD period. The
   nominal starting price per MWh will be determined based on the strike
   price plus accumulated inflation from 2012 until the CfD starts. After the
   CfD ends, Hornsea 3 will receive the market price for electricity or enter
   new power purchase agreements. 

   Ørsted's previously guided EBITDA for 2023 of DKK 20-23 billion, excluding
   new partnership agreements and provision related to Ocean Wind 1, remains
   unchanged.

   Global Media Relations
   Tom Christiansen
   +45 99 55 60 17
    1 tomlc@orsted.com

   Investor Relations
   Rasmus Keglberg Hærvig
   +45 99 55 90 95
    2 IR@orsted.com     

   About Ørsted
   The Ørsted vision is a world that runs entirely on green energy. Ørsted
   develops, constructs, and operates offshore and onshore wind farms, solar
   farms, energy storage facilities, renewable hydrogen and green fuels
   facilities, and bioenergy plants. Ørsted is recognised on the CDP Climate
   Change A List as a global leader on climate action and was the first
   energy company in the world to have its science-based net-zero emissions
   target validated by the Science Based Targets initiative (SBTi).
   Headquartered in Denmark, Ørsted employs approx. 8,700 people. Ørsted's
   shares are listed on Nasdaq Copenhagen (Orsted). In 2022, the group's
   revenue was DKK 132.3 billion (EUR 17.8 billion). Visit  3 orsted.com or
   follow us on Facebook, LinkedIn, Instagram, and X.

       Attachments

     •  4 Hornsea 3 FID.pdf

   News Source: Ritzau

   ══════════════════════════════════════════════════════════════════════════

   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

   ══════════════════════════════════════════════════════════════════════════

   ISIN:          DK0060094928
   Category Code: MSCM
   TIDM:          Orsted
   Sequence No.:  293262
   EQS News ID:   1801437


    
   End of Announcement EQS News Service

   ══════════════════════════════════════════════════════════════════════════

    5 fncls.ssp?fn=show_t_gif&application_id=1801437&application_name=news&site_id=refinitiv2

References

   Visible links
   1. mailto:tomlc@orsted.com
   2. mailto:IR@orsted.com
   3. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=c17d04adc46793f4466471ea992e18f7&application_id=1801437&site_id=refinitiv2&application_name=news
   4. https://eqs-cockpit.com/cgi-bin/fncls.ssp?fn=redirect&url=7e5a3d9608b9d6aec9f46a9450996014&application_id=1801437&site_id=refinitiv2&application_name=news


============