Orsted Slashes its Growth Plans After a Challenging Year
Danish energy company Orsted, the global leader in offshore wind, has radically rolled back its plans for expansion. The company has cut its 2030 development target down from 50 GW to 35-38 GW, withdrawn from three European markets and reduced headcount by hundreds of positions.
The company's operating revenue exceeded expectations this year, thanks to strong results at UK and Taiwanese wind farms, but it still posted a loss of $3 billion because of charges and impairments, primarily from the cancellation of its New Jersey projects. Soaring supply chain costs and interest rates have forced Western wind developers to change their business plans, and Orsted determined that its Ocean Wind 1 and 2 projects off New Jersey were no longer viable.
In response to the recent headwinds, Orsted has scaled back its ambitions. It is cutting planned investments by $5 billion over the next three years; quitting the Norwegian, Portuguese and Spanish markets; and laying off 800 staffmembers. Chairman Thomas Thune Andersen will also be departing, joining former CFO Daniel Lerup and COO Richard Hunter, who left late last year.
“We are very confident we can create value and we can deliver the plan,” CEO Mads Nipper told the FT on a conference call. “This is not only what our investors need but also what the green transformation needs."
Orsted has reduced its 2030 targets by a quarter, cutting its capex needs.
The plan puts Orsted on track to carry on its development program without raising new capital, reassuring shareholders that their stock will not be diluted.
"The plan itself does not restore confidence, but it looks reasonable and it's a good start," Danish teachers' pension fund chief Anders Schelde told Reuters.