President Biden's 'wind revolution' is blowing down as the world's largest offshore wind farm developer abandoned two major US projects due to supply chain and interest rate impacts and recorded impairment charges well above previous forecasts.
Orsted A/S announced, "US offshore wind projects have experienced further negative developments from adverse impacts relating to supply chains, increased interest rates, and the lack of an OREC adjustment on Sunrise Wind," which has forced it to cease the development of the Ocean Wind 1 and 2 projects off the coast of New Jersey.
Orsted said, "Total impairments recognized in the interim financial report for the first nine months of 2023 amount to DKK 28.4 billion [$4 billion], and the majority of these relate to Ocean Wind 1." This figure is much larger than the previously announced impairment in August on its US portfolio of up to DKK 16 billion.
Mads Nipper, chief executive, said he was "Extremely disappointed to announce that we are ceasing the development of Ocean Wind 1 and 2," adding, "The significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision, and we will now assess the best way to preserve value while we cease development of the projects." Shares in Denmark-listed green energy giant crashed as much as 22%, falling to lows not seen in six years.
Analysts from Citi were negative on today's developments: Citi Bad news continues to drip out of Orsted, analyst Jenny Ping writes in a note Impairment charge of DKK28.
Under the Inflation Reduction Act, Orsted has received upwards of 30% tax credits, but more appears to be needed as a financial crisis is brewing in the offshore wind power industry.
Last week, Siemens Energy in Germany crashed after the company warned its wind turbine business is grappling with quality issues and offshore ramp-up challenges.
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