World’s largest offshore wind farm now fully operational

Hornsea Two – the world’s largest offshore wind farm – is now fully operational, Orsted has announced.

The wind farm, located 89 kilometres off the coast of Yorkshire, features 165 of Siemens Gamesa’s 8MW turbines, giving it a total capacity of more than 1.3GW.

Hornsea Two takes the title of world’s largest offshore wind farm from its 1.2GW sister project Hornsea One. They will both eventually be overtaken by Orsted’s colossal 2.8GW Hornsea Three project, which earlier this year was awarded a Contracts for Difference (CfD) agreement in the fourth allocation round.

Following the opening of Hornsea Two, Orsted said it now operates 13 offshore wind farms in the UK with a combined generation capacity of 6.2GW.

Patrick Harnett, vice president for Orsted’s UK programme, said: “This project has been an amazing endeavour. To build the world’s largest offshore windfarm during a global pandemic has been a challenge that the team have overcome with flying colours. I am so proud of how our team has worked together to safely deliver this remarkable project. A huge thank you to all those involved in making it happen.”

Over the last five years, Orsted said it has placed contracts with UK suppliers for Hornsea Two worth £4.5 billion and it expects to invest another £8.6 billion over the next decade.

Duncan Clark, head of the UK region for Orsted, says: “The UK is truly a world leader in offshore wind and the completion of Hornsea Two is a tremendous milestone for the offshore wind industry, not just in the UK but globally. Current global events highlight more than ever the importance of landmark renewable energy projects like Hornsea Two, helping the UK increase the security and resilience of our energy supply and drive down costs for consumers by reducing our dependence on expensive fossil fuels.

“Not only will Hornsea Two provide low cost, clean energy for millions of homes in the UK, it has also delivered thousands of high-quality jobs and billions of pounds of investment in the UK’s offshore wind supply chain.”

Hornsea Two secured a CfD in the second allocation round in 2017 at a strike price of £57.50/MWh (2012 prices). In August last year, Orsted notified the Low Carbon Contracts Company that it would not trigger the first phase of the CfD until March 2023.

The firm said the decision to delay the beginning of the contract beyond the expected start of generation and sell the initial output on the wholesale market was intended to stabilise the revenues from Hornsea Two for a higher proportion of the asset’s life and therefore reduce its risk profile.

However, this also means consumers will not benefit from paybacks that they would otherwise receive due to the current high electricity prices until the start of the contract in March.

Orsted said it will not receive a windfall from delaying the start of the contract as the initial output from the wind farm was sold in the August last year, before the power prices reached their current unprecedented highs, in particular due to Russia’s invasion of Ukraine in February.

In March of this year, Orsted agreed to sell a 50% stake in Hornsea Two to Axa’s investment management arm and Crédit Agricole Assurances in a £3 billion deal. The transaction was expected to be completed in the second half of 2022.

Meanwhile, Ofgem has announced that Diamond Transmission Partners has been selected as the preferred bidder to own and operate the transmission connection for Hornsea Two for the next 24 years.

Diamond Transmission Partners, a consortium comprising Mitsubishi Corporation and HICL Infrastructure, was selected by the regulator through a competitive bidding process under the Offshore Transmission Owners (OFTO) regime.

Ofgem said the link is the most valuable yet to be brought to market through the OFTO regime, with an initial estimated value of £1.189 billion. Once the final value has been agreed by Ofgem and the regulator has granted it a licence to own and operate the assets, the consortium will pay this amount to Orsted.

Transmission Capital Partners has been selected as the reserve bidder in case Diamond Transmission Partners fails to complete the tender process.

Akshay Kaul, Ofgem interim director of infrastructure and security of supply, said: “Connecting offshore wind farms such as Hornsea 2 to Great Britain’s electricity transmission network helps harness the power of North Sea wind to deliver renewable energy supplies to British consumers.

“The competitive OFTO regime helps ensure this is done at the least possible cost to consumers.”

Ofgem said the OFTO regime, which was launched in 2009, has far secured £7 billion of private investment in offshore transmission assets, whilst connecting more than 10GW offshore generation to the power grid.

The regulator expects up to 13 transmission assets, with a combined value of £10 billion, to be tendered through the regime between 2023 and 2025. The tenth OFTO tender round is due to begin in early 2023.