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The world’s largest offshore wind developer Ørsted has abandoned two key US projects and announced a higher than expected writedown of its portfolio, sending shares in the group down more than 20 per cent.
The Danish group booked impairments of DKr28.4bn ($4bn), saying it had “no choice” but to stop developing its Ocean Wind 1 and 2 projects off the coast of New Jersey.
The decision, which the company blamed on supply chain delays, higher interest rates and changes to its assumptions around tax credits and construction permits, underlines the mounting challenges facing the wind industry.
The company had warned in August that it expected to write down the value of its US assets by a potential DKr16bn because of problems with Ocean Wind 1 and other projects.
However, early on Wednesday, Ørsted said its US offshore wind projects had “experienced further negative developments”. As a result, the company was now “taking measures to support its capital structure”, such as rationalising its portfolio.
Mads Nipper, chief executive, said he was “extremely disappointed” in the decision on the US projects, adding: “We firmly believe the US needs offshore wind to achieve its carbon emissions reduction ambition.”
The group’s shares, which are listed in Copenhagen, were down by a fifth in early trading, extending their drop this year to 57 per cent.
The company is pushing ahead with another project, Revolution Wind, which it expects to be completed in 2025. The retreat by Ørsted is a setback for US climate ambitions and threatens to slow President Joe Biden’s plans to deploy 30 gigawatts of offshore wind by 2030.
The Biden administration’s Inflation Reduction Act included significant subsidies for offshore wind developers. The Ocean Wind projects promised to generate more than 2GW of offshore wind power in New Jersey.
Still majority-owned by the Danish state, Ørsted has in recent years transformed itself from an oil and gas producer into a leading wind company.
In a sign of the strains afflicting the industry, Swedish developer Vattenfall halted work on its Norfolk Boreas project in the UK North Sea in July, saying it was no longer viable at the electricity price it agreed with the government a year earlier.