Irish offshore wind farm developers have reacted with surprise and some alarm following the decision by the world’s largest wind developer to halt work on a vast UK project, citing rising costs and the risk of delays.
The Hornsea 4 project involved a UK government contract offering more favourable payment terms than those for three major projects in the pipeline for Irish waters.
A fourth wind farm project awarded a State contract, at Sceirde Rocks off Connemara, was shelved recently by Corio Generation, which said this was due to difficulties with the location that emerged in recent surveys.
Ørsted said it was stopping spending and cancelling contracts for Hornsea 4 off Yorkshire in the North Sea. The a 2.4 gigawatt (GW) project would have been capable of powering more than one million homes.
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The project won a contract guaranteeing a fixed electricity price of £58.87 per megawatt hour, but Ørsted said it could not make the proposed wind farm work.
The company said its decision would cost up to £513 million this year due to “break costs” from cancelled contracts with suppliers.
One source told The Irish Times that applying 2025 prices, the “strike price” for Hornsea 4 was €96.27, more than 10 per cent higher than the average strike price of €86.05 awarded to Irish developers.
This called into question the viability of “phase one projects” supported by the Government under its offshore renewable electricity support scheme (ORESS), he said.
“On that basis, we shouldn’t be surprised at Macquarie (Corio) recently abandoning the Sceirde Rocks. And we shouldn’t be surprised if other offshore projects come under pressure.”
Another said “continued chronic delays in the Irish planning process” were compounding the challenges and uncertainties facing wind energy projects.
However, developers noted two important differences between Irish contracts and the Hornsea contract, which would have enabled Irish projects to bid, and deliver, at lower prices.
Minister for Energy and Climate Darragh O‘Brien said the Government was determined to deliver on its offshore wind commitments up to 2030 with five “advanced-stage” projects in the pipeline – two of which do not have State contracts.
Its Offshore Wind Delivery Taskforce would also be strengthened by “bringing in the private developers, as it is important they are also at the table”, Mr O‘Brien said.
As Minister, he said he would ensure the necessary resources were in place to deliver on offshore timelines for 20GW by 2040.
“ORESS contracts are for 20 years while British contracts are for 15. That makes a massive difference,” said Wind Energy Ireland chief executive Noel Cunniffe.
“One of the main asks we have as an industry is to extend the onshore contracts to 20 years as well to help reduce prices. It’s massively helpful in de-risking the project and making it much easier (and cheaper) to raise capital.”
Irish projects were also entitled to “unrealised available energy compensation”, he said, adding that this entitled developers to be compensated if forced to turn off or down renewable power for reasons of over-supply or curtailment.
“That’s another big benefit. British wind farms don’t have this and, considering the levels of curtailment they’re experiencing right now, any British wind farm developer would give a limb for it,” Mr Cunniffe said.
“The British government has said they are going to work to get the project back on track and we hope they succeed.”
Ireland “cannot afford to lose projects” and confidence needed to be built in terms of investors and the international supply chain, he added.
“The best way to do this is for the Government to continue to work closely with industry to protect and deliver the phase one projects, while delivering a second successful auction later this year for our south coast and building a strong pipeline of projects.”
ESB, Ireland’s largest utility, and the Danish company Ørsted signed an agreement in 2023 to jointly develop an Irish offshore wind portfolio. Separately, it has racked up impairments and provisions of just under €400m in relation to its embattled Neart na Gaoithe offshore wind energy project in Scotland – but expects to make a profit from the 448MW facility.
An ESB spokesman said: “We are progressing a number of offshore wind projects, and we remain committed to them.”
Another industry source involved in a major Irish offshore project said: “Orsted’s decision shows that, even with the cornerstone elements of project delivery in place – namely planning permission and a route to market – the offshore wind market remains a turbulent environment for developers.
“Supply chain pressures are a huge constraint in the sector, and can ultimately prove insurmountable when developers are squeezed by fixed delivery timelines and revenue requirements.
“If Ireland is to develop its own offshore wind industry to rival the UK’s, then there are a lot of important lessons that will need to be learnt, and it’s all the more important that the remaining phase one projects are prioritised so that Ireland can take advantage of its undoubted offshore potential.”
Minister O’Brien added: “We are committed to delivering on our offshore energy ambitions; this progress is being driven by a cross-Government Offshore Wind Delivery Taskforce, which I chair. The taskforce comprises 16 departments and agencies across the State. I will also be bringing in the private developers, as it is important they are also at the table,” he added.
“We have five advanced-stage phase one projects, with live planning applications, which can deliver a combined capacity of 3,800MW,” he added.
As an immediate next step, the Tonn Nua auction – the first site within Ireland’s first spatial plan for offshore renewable energy, the South Coast DMAP off Waterford – will be held in the autumn, procuring a further 900MW of capacity.
Following this, the State “will look to bring forward the remaining three sites within the South Coast DMAP, ensuring a consistent pipeline of offshore developments”.
The Government recently approved development of a “national designated maritime area plan” (DMAP), he said, which will significantly accelerate roll-out of Irish offshore energy, and “enable the State to reach 20GW of offshore wind by 2040. We aim to adopt this national DMAP by the end of 2027”.
