Ørsted faces $1.7 billion impairment due to US wind By Investing.com

COPENHAGEN – Danish energy company Ørsted A/S announced a fourth-quarter 2024 loss totaling $12.1 billion ($1.7 billion). Wind project.

The losses were mainly due to a 75-basis point increase in the weighted average cost of capital driven by the rise in long-term US interest rates. This increase had a significant impact on the value of Orsted’s US offshore wind projects, resulting in a DKK 4.3 billion impairment. In addition, the company recognized a DKK 3.5 billion shortfall on its offshore leases along the coasts of New Jersey, Maryland and Delaware.

Challenges in the construction of the Solar Rice Wind Project, including supply chain issues and the need for additional costs to maintain the schedule, further contributed to the Rs 4.3 billion shortfall. The commissioning of the project has been delayed to the second half of 2027.

Despite these setbacks, Ørsted’s preliminary and unaudited EBITDA for 2024 is reported at 24.8 billion kroner, which is in line with the company’s latest guidance. Operating income from onshore and offshore was in line with expectations and was the main contributor to this figure.

Mads Knipper, Group President and CEO of Ørsted, said he was disappointed by the construction challenges but remained optimistic about the company’s performance and long-term commitment to the US market. Nipper emphasized the strategic importance of the offshore contract and the importance of the Sunrise Wind Project, which is expected to generate about 600,000 American homes and hundreds of jobs through offshore wind power.

Despite the flaws, Nipper believes the Sunrise Wind Project is still profitable, with a single-digit life-cycle IRR (internal rate of return) and an attractive forward-looking IRR based on current estimates.

Ørsted plans to host an investor and analyst call on January 21, 2025 to discuss impairments and 2024 EBITDA. The company will publish its 2024 annual report on February 6, 2025. This article is based on a press release from Ørsted.

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