Shares in the world’s largest offshore wind company have tumbled by nearly a quarter after it said it may have to write down the value of its US portfolio by nearly £2bn.
Ørsted said it had been hit by a flurry of setbacks in its American business, triggering a rapid sell-off in its shares, listed in Copenhagen.
In their haste to dump the stock, investors had cut the notional value of the business by nearly £7bn by the time the market closed on Wednesday.
The Danish firm’s woes include soaring costs in its supply chain, echoing problems cited by Swedish rival Vattenfall, which suspended a giant British offshore windfarm project off the coast of Norfolk last month.
That project would have rivalled Ørsted’s Hornsea 2 farm, off the coast of Yorkshire, the world’s largest offshore windfarm with a capacity of 1.3GW, capable of powering 1.4m homes.
Ørsted’s planned US windfarms are significantly smaller but its admission of concerns about its ambitions in North America were the cause of Wednesday’s sell-off.
It pointed to significant problems in the supply chain that were likely to affect Ocean Wind 1, Sunrise Wind and Revolution Wind, planned windfarms off the eastern seaboard of the US.
Delays could cost 5bn Danish kroner (£580m), the company said, adding that the Ocean Wind 1 project would be commissioned a year later than scheduled, in 2026.
The company has also had setbacks in its discussions with US lawmakers about tax credits it hoped to secure on the first two of the projects.
Ørsted is trying to secure relief of at least 40% from the US government on all of its projects. The company said talks were “not progressing as we previously expected” and that it was struggling to get past the 30% threshold.
Failure to break the deadlock in talks could result in a one-off charge of up to 6bn kroner, Ørsted said.
Another factor is persistently high interest rates, which the company predicted would cost a further 5bn kroner if rates did not drop before the end of the third quarter.
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Ørsted reported its half-year results less than three weeks ago, hailing its overall performance in the first six months of the year.
Although it did warn of rising costs in the US, it gave little indication of the scale of the risks that it flagged on Wednesday.
The exact cost of its US problems will be quantified in its nine-month results due to be published in November.
“The US offshore wind market remains attractive in the long term,” said the company’s Americas chief, David Hardy.
Ørsted was previously known Dansk Olie og Naturgas (Danish oil and natural gas, or Dong Energy), but it pivoted to wind power over the course of the last 15 years.
It has since capitalised on a huge wave of environment-focused investment, particularly during the pandemic. However, it has struggled in recent months with supply chain problems, which have delayed projects.
Its share price has dropped by two-thirds from its peak in early 2021, at the height of the pandemic investment frenzy.
