Stay informed with free updates
Simply sign up Renewable energy myFT Digest – delivered straight to your inbox.
The world's largest offshore wind developer has announced new writedowns for its US business, in a blow to its efforts to move forward from its troubles in the country.
Ørsted announced impairment charges totaling DKK 12.1 billion (£1.36 billion) on Monday evening, blaming interest rates, supply chain challenges and “market uncertainty” affecting the value of seabed leases.
This announcement comes after 28.4 billion Danish kroner Disabilities against the Danish company's US portfolio in 2023, which is also blamed on rising interest rates and supply chain challenges, and is likely to raise more questions about its strategy in the country.
This came hours after the inauguration of Donald Trump as President of the United States, after he pledged during his election campaign to stop offshore wind energy projects on the “first day” of his presidency.
In a press release Monday, the White House said Trump's energy policies “will end the leasing of massive wind farms that degrade our landscape and fail to serve American energy consumers.”
She added that Trump would withdraw the United States from the Paris Climate Agreement, signed in 2015 as part of a global effort to limit climate change.
Chief Executive Mads Nipper said the impairment was “very disappointing” but the company remained “committed to the US market for the long term”.
“We continue to navigate the complexities and uncertainties we face in the emerging marine industry in the new American market,” he added.
Ørsted It entered the United States in 2018 As a leader in the offshore wind industry, it struggled, along with many of its peers, when interest rates rose and supply chains came under pressure in the wake of the Covid pandemic.
In November 2023, it said it would abandon two projects off the coast of New Jersey, spooking shareholders with a write-down of DKK 28.4 billion, which was higher than expected.
In an attempt to turn the business around, the company said last February that it had suspended its dividend, cut up to 800 jobs, and withdrawn from the offshore wind energy markets in Norway, Spain and Portugal in an attempt to focus on core areas.
In Monday's announcement, Ørsted said increases in long-term interest rates in the United States led to a higher cost of capital, accounting for DKK 4.3 billion of the total impairment charge of DKK 12.1 billion.
It reserved a further DKK 3.5 billion due to “market uncertainty” affecting the value of several seabed leases, while a final sum of DKK 4.3 billion covered delays to the Sunrise Wind offshore wind project off the coast of New York. This project is now scheduled to be operational in the second half of 2027.
However, Ørsted said it would stick to its full-year operating profit guidance of DKK 24.8 billion for 2024. It said the performance of its wind farms, both onshore and offshore, was in line with expectations. Total revenue in 2023 was DKK 79.3 billion.
The company's shares have fallen about 20 percent over the past 12 months, and are about 77 percent below their peak in January 2021 at the height of interest in environmental stocks.
