Ørsted has recorded a DKr22.56bn ($3.2bn) loss in the third quarter (Q3) of 2023 after being hit by an impairment charge tied to its US offshore wind portfolio. The loss compares with a profit of DKr9.35bn in the same quarter of 2022.
In the first nine months of 2023, the Danish energy company booked impairments of DKr28.4bn, of which DKr19.9bn was associated with the Ocean Wind 1 project.
These impairment losses, driven by factors such as supply chain disruptions and interest rate hikes, resulted in the company cancelling its 2.25GW Ocean Wind 1 and 2 projects in New Jersey, US.
New Jersey Governor Phil Murphy called Ørsted’s decision to scrap the projects "outrageous", adding that it raises doubts about the company’s “credibility and competence”.
The move forms part of the company’s ongoing review of its offshore wind portfolio in the US.
These writedowns are higher than were forecast in April 2023, when the company warned that the figure could reach DKr16bn.
However, onshore construction has commenced for Revolution Wind, another of Ørsted’s US projects, which it jointly owns with Eversource. The Danish company has reached a final investment decision on the 704MW project and plans to complete its offshore construction in 2024.
Ørsted is additionally considering rebidding for the Sunrise Wind project in New York, also owned by a joint venture with Eversource, in an accelerated offshore wind solicitation.
The Danish utility’s revenues almost halved to DKr19.02bn in the quarter that ended 30 September 2023 versus DKr36.54bn in the same quarter of the previous year.
Earnings before interest, taxes and amortisation (EBITDA) dropped 26% to DKr9.17bn from DKr12.32bn over this period.
The company confirmed that a provision tied to the cancellation of Ocean Wind 1 will also negatively affect EBITDA in Q4 2023.
Ørsted group president and CEO Mads Nipper stated: “We firmly believe the US needs offshore wind to achieve its carbon emissions reduction ambition, and we remain committed to the US renewables market and truly value the efforts by the US Government to support the build-up of the US offshore wind industry. However, 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.”
For the full year 2023, Orsted retains its EBITDA outlook of DKr20–23bn by stripping off new partnership agreements and the projected provision. The company has now lowered its full-year gross investment forecast by DKr4bn, to between DKr40 and DKr44bn.
