Revolution Wind Might Be Okay — Even If Orsted Isn’t

The Danish offshore wind company Orsted was already in trouble. It was looking to raise about half of its market value in new cash because it couldn’t sell stakes in its existing projects. The market hated that idea, and the stock plunged almost 30% following the announcement of the offering. That was two weeks ago.

The stock has now plunged again by 16% to a record low on Monday. That follows the announcement late Friday night that the Department of the Interior had issued a stop work order for the company’s Revolution Wind project, off the coasts of Rhode Island and Connecticut. This would allow regulators “to address concerns related to the protection of national security interests of the United States,” the DOI’s letter said. The project is already 80% complete, according to the company, and was due to be finished and operating by next year.

While Donald Trump’s antipathy towards the wind industry — and especially the offshore wind industry — is no secret, analysts were not convinced the order would be a death blow to project, let alone Orsted. But it’s still quite bad news.

“This is another setback for Orsted, and the U.S. offshore wind industry,” Jefferies analyst Ahmed Farman wrote in a note to clients on Sunday. “The question now is whether a deal can be struck to restart the project like Empire Wind,” the New York offshore wind farm that received a similar stop work order in April, only to have it lifted in May.

Morningstar analyst Tancrede Fulop tacked in the same direction on Monday. “We expect the order to be lifted, as was the case for Equinor’s Empire Wind project off the coast of New York last May,” he wrote in a note to clients, adding an intriguing post-script: “The Empire Wind case suggests President Donald Trump’s administration uses stop-work orders to exert pressure on East Coast Democratic governors regarding specific issues.”

When the federal government lifted its stop work order on Empire Wind, Secretary of the Interior Doug Burgum wrote on X that he was “encouraged by Governor Hochul’s comments about her willingness to move forward on critical pipeline capacity,” likely referring to two formerly moribund pipeline proposals meant to carry shale gas from Pennsylvania into the Northeast. Hochul herself denied there was any quid pro quo between the project restarting and any pipeline developments. Meanwhile, the White House said days later that Hochul had “caved.”

The natural question becomes, then, what can the governors of Rhode Island and Connecticut offer Trump? At least so far, the states’ Democratic governors have criticized the administration for issuing the stop work order and said they will “pursue every avenue to reverse the decision to halt work on Revolution Wind.”

Yet they have no obvious card to play, Allen Brooks, a former Wall Street analyst and a senior fellow at the National Center for Energy Analytics, told me. “They were not blocking pipelines the way the state of New York was, so there’s not much they can do,” he said.

Even if Interior does reverse the order, the risk of a catastrophic outcome for Orsted has certainly gone up. The company’s rights issue, where existing shareholders have an option to expand their stakes at a discount, is intended to raise 60 billion Danish kroner, or around $9 billion, with some 5 billion kroner, or $800 million, due to complete Revolution. Jefferies has estimated that Revolution, which Orsted owns half of, will ultimately cost the company $4 billion.

The administration’s active hostility toward wind development “calls into question that business model,” Brooks told me. “There’s going to be a lot of questions as to whether [offshore wind developers] are going to be able to raise money.”

The Danish government, which is the majority shareholder of Orsted, said soon after the announcement that it would participate in the fundraising. The company reaffirmed that patronage on Monday, saying that it has the “continued support and commitment to the rights issue from its majority shareholder.”

Orsted’s big drop will also drag down the fortunes of its neighbor Norway, via the latter’s majority state-owned wind power company Equinor, which bought a 10% stake in Orsted late last year.

“Their investment decision looks terrible,” Brooks told me.

At the close of trading in Europe, Orsted’s market capitalization stood at around $12 billion. That’s about a third less than where it sat before the share sale announcement.

In a worst case scenario involving the cancellation of both Revolution and Sunrise Wind, another troubled offshore project planned to serve customers in Massachusetts, Fulop predicts that the long-run value of Orsted would go down enough that it would have to offer its new shares at a greater discount — which would, of course, raise less money.

The best case scenario may be that Orsted will join its Scandinavian peer in resolving a hostage negotiation with the White House, with billions of dollars of investment and over 1,000 jobs in the balance.

“The Empire Wind case suggests President Donald Trump’s administration uses stop-work orders to exert pressure on East Coast Democratic governors regarding specific issues,” Fulop wrote. Right now, it’s workers, investors, elected officials, and New England ratepayers feeling the pressure.