How Tariffs and Trump Led to Orsted’s Big Stock Sale

Orsted is going to investors — including the Danish government — for money it can’t get for its wind projects, especially in the troubled U.S. offshore wind market.

The Danish developer, which is majority owned by the Danish government, told investors on Monday that it would seek to raise over $9 billion, about half its valuation before the announcement, by selling shares in the company.

Publicly traded companies do not typically raise money by selling stock, which is more expensive for the company, tending instead to finance specific projects or borrow money.

But the offshore wind business is not any industry.

In normal times, Orsted and other wind developers will conduct “farm-downs,” selling stakes in projects in order to help finance the next ones. Due to “recent material adverse development in the U.S. offshore wind market,” however, the early-morning announcement said, “it is not possible for the company to complete the planned partial divestment and associated non-recourse project financing of its Sunrise Wind offshore wind project on the terms which would provide the required strengthening of Orsted’s capital structure” — a long way of explaining that it can’t find a buyer at an acceptable price. Hence the new equity.

While the market had been expecting Orsted to raise capital in some form, the scale of the raise is about twice what was anticipated, according to Bloomberg’s Javier Blas.

About two-thirds of the stock sale will be used to continue financing Sunrise Wind, a 924-megawatt planned offshore wind project off the coast of Long Island, according to Morgan Stanley analysts. Construction began last summer, just days after Orsted took full ownership of the project by buying out a stake held by the utility Eversource.

Despite all the sound and fury around offshore wind in the United States, the company said in its earnings report, also released Monday, that “we successfully installed the first foundations at Sunrise Wind, following completion of the wind turbine foundation installation at Revolution Wind,” a 704-megawatt project off the coasts of Rhode Island and Connecticut. “Construction of our offshore U.S. assets is progressing as expected and according to plan,” the company said.

But the report also said Orsted took a hit of over a billion Danish kroner in the first half of this year due to tariffs and what it gingerly refers to as “other regulatory changes, particularly affecting the U.S.,” a.k.a. President Donald Trump.

The president and his appointees have been on a regulatory and financial campaign against the wind sector, especially offshore wind, attempting to halt work on another in-construction New York project, Empire Wind, before Governor Kathy Hochul was able to reach a deal to continue. All future lease sales for new offshore wind areas have been canceled.

Even before Trump came back into office, the offshore wind industry in the U.S. had been hammered by high interest rates, which raised the cost of borrowed money necessary to fund projects, and spiraling supply chain costs and project delays, which also increased the need for the more expensive financing.

“Because of the sharp rise in construction costs and interest rates since 2021, all the projects turned out to be value-destructive,” Morningstar analyst Tancrede Fulop wrote in a note about the Orsted share issue. The company took large losses on scuttled projects in the U.S. and already cancelled its dividend and announced a plan to partially divest many other projects in order to shore up its balance sheet and fund future projects.

While the start-and-stop Empire Wind project belongs to Equinor, Orsted’s Scandinavian neighbor (majority-owned by the Norwegian government), Orsted management told analysts on its conference call that “the issues surrounding Empire Wind's stop-work order from April 2025 had negatively impacted financing conditions for Sunrise,” according to Jefferies analyst Ahmed Furman.

Equinor, too, has had to take a bigger share of Empire Wind, buying out the stake held by BP in January of this year. BP had bought 50% stakes in three Equinor wind projects in 2020, but last year wrote down its investment in the offshore wind sector in the U.S. by over $1 billion.

Why could Orsted not simply pull out of Sunrise Wind? “Orsted and our industry are in an extraordinary situation with the adverse market development in the U.S. on top of the past years’ macroeconomic and supply chain challenges,” Rasmus Errboe, who took over as the company’s chief executive earlier this year, said in a statement. “To deliver on our business plan and commitments in this environment, we’ve concluded that a rights issue is the best solution for Orsted and our shareholders.”

The Danish government will maintain its 50.1% stake in the company, putting the small Scandinavian country with its low-boiling trade and territorial conflicts against the Trump administration in direct capitalist conflict with the American president and his least favorite form of electricity generation.

In the immediate wake of the announcement, Jefferies analyst Ahmed Farman wrote to clients that the deal would “obviously de-risk the [balance sheet], but near-term dilution risk seems substantial,” citing the unexpected magnitude of the raise and no sign pointing to new growth. “As a result, we expect the initial stock reaction to be quite negative.”

And so it has been: The stock closed down almost 30%, its biggest-ever single-day drop and below the price at which it went public in 2016, according to Bloomberg data.