Orsted A/S, one of the largest offshore wind farm developers globally, saw its shares plunge by as much as 18% following a significant financial setback.
The Danish company recorded a $1.7 billion impairment due to rising costs and delays in its US wind projects, which have been compounded by challenges stemming from President Donald Trump’s stance on offshore wind energy.
The writedown of 12.1 billion Danish kroner was attributed to a variety of factors. These included the increasing costs of construction, particularly related to the Sunrise Wind project off the coast of Long Island, New York, as well as the impact of rising US interest rates on capital costs. Additionally, the company faced difficulties stemming from “market uncertainties,” which affected the value of its seabed leases in US coastal areas, including New Jersey, Delaware, and Maryland.
In a statement, Orsted CEO Mads Nipper described the impairments as “very disappointing,” though he reaffirmed the company’s long-term commitment to the US market. Despite the setbacks, Orsted is holding to its 2024 operating profit forecast, with expectations for revenues in the range of 24 to 26 billion Danish kroner.
This news comes amid broader challenges in the offshore wind sector, especially in the United States. The company has struggled with the rising costs of materials and supply chain issues, which have made some of its key projects financially unfeasible. Last year, Orsted abandoned two major projects off the New Jersey coast, recording a $4 billion writedown as a result.
The situation was further complicated by the inauguration of President Trump, who has been vocal about his opposition to offshore wind farms. In a move that sent ripples through the industry, Trump signed an executive order aimed at halting federal leasing and permitting for new wind projects. This action threatens to derail the growth of the offshore wind sector, casting uncertainty over the future of Orsted’s US operations. Although the impact of Trump’s order was not included in the recent impairment, Orsted has indicated it will review the situation and assess how it might affect its US portfolio.
Bloomberg, the Financial Times, and Market Watch contributed to this report.
