World's largest offshore wind farm enters operation in UK

The world's largest offshore wind farm, Hornsea 2 in the U.K., is now in full operation, project operator Ørsted A/S said Aug. 31.

The 1.3-GW site comprises 165 Siemens Gamesa Renewable Energy SA wind turbines 89 kilometers off the coast of Yorkshire in northeast England. It will be able to power 1.4 million U.K. homes, Ørsted said.

"Not only will Hornsea 2 provide low-cost, clean energy for millions of homes in the U.K., it has also delivered thousands of high-quality jobs and billions of pounds of investment in the U.K.'s offshore wind supply chain," said Duncan Clark, Ørsted's head of the U.K. region.

The project will eventually sell its power via a 15-year contract for difference, or CfD, which it was awarded in 2017 at a fixed price of £57.50/MWh, or £73.71/MWh in today's prices. However, Ørsted intends to operate the wind farm through the winter on a merchant basis before triggering its CfD, Mads Nipper, CEO and group president, said Aug. 11.

Being exposed to wholesale market prices is favorable for developers as markets have surged since the beginning of the year. U.K. offshore wind capture prices were £519.04/MWh as of Aug. 29, according to S&P Global Commodity Insights data, averaging £205.77/MWh in 2022.

A company spokesperson said the first 460-MW phase of Hornsea 2's CfD is scheduled to begin at the end of March 2023. Two subsequent phases of the same capacity are scheduled for a CfD start in March 2024, according to the Low Carbon Contracts Company, the government agency that administers the CfD process.

Hornsea 2 incurred delays in the commissioning timeline, and associated hedges weighed on Ørsted's results in the first half of 2022.

In March, Ørsted agreed to sell a 50% stake in the wind farm to AXA IM Alts, part of AXA Investment Managers SA, and Crédit Agricole Assurances SA.

More recently, its 2.8-GW sister project, Hornsea 3, was awarded a CfD at a strike price of £37.35/MWh in 2012 money.

Hornsea 2 makes a significant contribution to the U.K.'s ambition to have 50 GW of offshore wind by 2030, Ørsted said. It also represents further investments in the supply chain and local jobs, the company said.

In the past five years, Ørsted has contracted with nearly 200 local suppliers, with £4.5 billion invested to date and another £8.6 billion set to be invested over the next decade, the company said.

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