The world’s largest offshore wind farm is coming to Britain but there will be only one winner from the scheme – and it isn’t electricity consumers. Wind energy giant Ørsted had raised doubts about the Hornsea 3 offshore project earlier this year. But after securing more generous subsidy arrangements from the government, the Danish firm is pressing ahead with the project. Soon, another 230 turbines will fill the North Sea due east of Hull.
The news this week is being hailed as a boost for Britain’s net zero strategy but don’t be deceived: the true cost of this scheme will be enormous. Last year, Ørsted won a contract for difference – which is designed to give a guaranteed price for energy – for the project with an inflation proof price of £37.55 per Megawatt hour (MWh) in 2012 money (£50.06 in today’s terms). But even generous inflation-proofing would not be enough to guarantee a profit. As a result, Ørsted was wary about giving the wind farm the green light.
Now, following further talks with the government, Ørsted says the company has been handed ‘flexibility’ to reduce the amount of generating capacity covered under the previous agreement by 25 per cent. So far, ministers have been mum about what this means for the price of electricity Ørsted expects to receive. One thing that seems likely is that it will not be the price Ørsted bid.
After the £37.55 strike price was announced last year, it was greeted like the Second Coming. ‘Offshore wind is now the cheapest form of electricity in this country,’ Boris Johnson gushed in one of his last public appearances as prime minister in September 2022. ‘Offshore wind is nine times cheaper than gas,’ Johnson claimed. He wasn’t the only one. In May, Rishi Sunak told the