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Sparks

The World’s Biggest Offshore Wind Developer Had a Horrible 2023, and It’s America’s Fault

Orsted came out with some not-great earnings.

Wind turbines.
Heatmap Illustration/Getty Images

The Danish energy developer Orsted delivered a withering verdict on its experiment trying to build wind farms in the United States: Bad. It’s lost a ton of money, the company said Wednesday, so it’s going to do less of that going forward, and take on way less risk.

That Orsted had struggled in the U.S. offshore wind market was no secret — late last year, it cancelled two projects in New Jersey — but its earnings report put some grim figures on it.

The company said that it had 9.6 billion Danish kroner worth of fees (about $1.4 billion) related to one New Jersey project, Ocean Wind 1, and had booked $4 billion of losses, most of which were due to Ocean Wind 1’s cancellation. Overall, it reported a loss of almost $3 billion in 2023, entirely due to the fees and impairments it reported. Otherwise, the company would have had a more than $2 billion profit.

The company’s offshore wind misadventure won’t just weigh on its balance sheet or stock price. Investors, including the Danish government, will miss out on the company’s dividend for three years, through 2025. And the company’s chairman, Thomas Thune Andersen, said he would step down next month.

All this also meant that the company expects to have far less installed renewable capacity developed by the end of the decade than it had previously targeted, down to 35 to 28 gigawatts from the 50 GW it had projected as recently as last year. (It has just under 16 GW at the moment.) The company will cut its planned investment by more than half, according to Morningstar analyst Tancrede Fulop.

Orsted and other wind developers have blamed a combination of supply chain issues, high interest rates, and inflexibility in the contracts signed with state governments for the failures, delays, and cancellations of projects up and down the East Coast last year. In New York, Orsted and other developers failed to get their contracts adjusted to account for higher costs, and so were forced to cancel and, in some cases, re-bid.

The company said in a presentation to investors that it was “now focused predominantly on the Northeast,” essentially throwing in the towel on anywhere south of New York, having withdrawn from the New Jersey project and declaring that its Maryland project, Skipjack, will continue development “with minimal spend.”

The trouble wasn’t just in the United States, though — Orsted also said it was pulling out of Norway, Spain, and Portugal, while it was “deprioritising development in other markets including Japan.” It does, however, seem committed to maintaining some presence here, having submitted a new bid for Sunrise Wind, a planned wind farm off the east coast of Long Island.

In a call with analysts, the company’s chief executive Mads Nipper said that Orsted will spend far less money on projects before making the final approval to go forward with construction. The company also said that it will “pursue offtake opportunities where attractive with low pre-FID commitments and inflation protection” — in other words, bid for projects with low upfront costs and someone else around to absorb rising costs.

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Matthew Zeitlin profile image

Matthew Zeitlin

Matthew is a correspondent at Heatmap. Previously he was an economics reporter at Grid, where he covered macroeconomics and energy, and a business reporter at BuzzFeed News, where he covered finance. He has written for The New York Times, the Guardian, Barron's, and New York Magazine.

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