The Danish offshore wind developer said that the financial strain was caused by several factors, including rising interest rates, a decline in the value of its seabed leases in the US, and increased costs associated with the construction of the Sunrise Wind offshore wind farm.
“The Sunrise Wind project is progressing on a tight construction schedule and is navigating challenges related to supply chain and construction,” according to the developer.
The expected commissioning of the project has been delayed into the second half of 2027. Ørsted said that the costs for the project have increased, especially related to the monopile foundations.
The delayed commissioning and higher expected project costs will lead to an impairment of DKK 4.3 billion in the fourth quarter of 2024.
In July 2024, Ørsted acquired Eversource’s stake in Sunrise Wind, New York’s new offshore wind farm, which is also in the construction phase as Revolution Wind, with offshore work scheduled to start this year.
“Our dedicated efforts to strengthen execution and navigate supply chain challenges will continue. We’re working diligently and in close collaboration with our suppliers to manage the remaining risks impacting the construction of Sunrise Wind. Delivering the project within the updated schedule and cost is an absolute top priority for Ørsted,” said Mads Nipper, Group President and CEO of Ørsted.
The charge from the decreased value of seabed leases off the coasts of New Jersey, Maryland, and Delaware will amount to DKK 3.5 billion.
Additionally, during the fourth quarter of 2024, the development of the long-dated US interest rates led to a 75-basis-point increase in the weighted average cost of capital, the company said. This increase adversely impacted the value-in-use for the US portfolio, primarily the offshore wind projects, leading to an impairment of DKK 4.3 billion, according to the Danish firm.
The cost hits put the operating profit for 2024 at DKK 24.8 billion, which the company says is in line with guidance.
“The impairments announced today, and especially the continued construction challenges, are very disappointing. We are, however, encouraged by the performance of our operations, and we’re confirming our full-year EBITDA guidance, supported by the increasing power production from our growing global fleet of renewable energy assets,” said Nipper.
“We remain committed to the US market in the long term with its potential for renewables to meet the growing electricity demand and create thousands of industrial jobs across the US.”
Regarding other news coming from the US, President Donald Trump recently issued an Executive Order pausing offshore wind leasing on the US Outer Continental Shelf (OCS) and mandating a review of the federal government’s leasing and permitting practices for wind projects. The Order also stops all relevant agencies from issuing approvals, either new or renewed, for both onshore and offshore wind projects until the review is completed.
