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Orsted reports $1.76 billion loss due to delays in US offshore projects


The Danish renewable energy company Ørsted has reported losses of USD $1.7 billion (equivalent to 12.1 billion Danish kroner) in the fourth quarter of 2024 due to a series of issues related to its operations in the United States, according to a preliminary report.

Delays and cost overruns at sunrise wind

The charges include a significant impact of  DKK 4.3 billion (USD $600 million) associated with the 924 MW Sunrise Wind project, which is facing delays and increased execution costs. Sunrise Wind, located in New York, has encountered challenges related to the supply chain and the installation of its high-voltage direct current (HVDC) transmission system. The project’s completion has been postponed to the second half of 2027, with a considerable increase in costs for monopile foundations and other components.

Besides the problems at Sunrise Wind, Ørsted recorded a $490 million charge due to a decline in the value of seabed leases in New Jersey, Maryland, and Delaware, reflecting current market uncertainties. Furthermore, a 75-basis-point increase in the weighted average cost of capital in the US has negatively impacted the value of the company’s offshore projects.

 


Source: Google Finance

 

Commitment to renewable energy amid policy uncertainty


Despite these difficulties, Ørsted reported that its adjusted operating profit (EBITDA) for 2024 reached USD$3.472 billion, meeting expectations and reflecting the solid performance of its global operations.

Mads Nipper, Ørsted’s CEO, expressed disappointment over the losses but reaffirmed the company’s commitment to the US market. "Although the construction challenges are disheartening, we remain committed to the long-term potential of renewable energy in the United States. We are working closely with our suppliers to manage the remaining risks and meet the updated schedule for the Sunrise Wind project," he stated.

After the company's announcement, the shares of the Danish renewable energy group dropped by as much as 17.50% on the Copenhagen Stock Exchange, causing significant losses for the renewable energy giant.
 
Despite the setbacks, Ørsted emphasized that Sunrise Wind remains profitable, with a projected mid-single-digit internal rate of return (IRR) over its lifecycle. The project has the capacity to provide clean energy to 600,000 homes and will create hundreds of long-term jobs in New York, contributing to the US energy transition.
 
In addition to the reported losses, the wind industry as a whole faces a more complex landscape due to the temporary suspension of offshore wind lease sales and the pause on permits for onshore and offshore wind projects, decreed by the new US President, Donald Trump. The measure, announced through a signed executive order, has sparked concern among renewable energy companies, which see the decision as a significant setback for the development of a crucial sector in the energy transition and the fight against climate change.

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