A Danish renewable energy group booked huge impairment losses Thursday after it pushed back the launch of one of its U.S. offshore wind projects, according to its first-half 2024 earnings report.
Orsted estimated the value of its assets declined $472 million in the first half of 2024, largely due to delays at the onshore substation for its 704 megawatt (MW) “Revolution Wind” project off the coast of Rhode Island and Connecticut, the report showed. The company also reported a variety of other problems, including losses related to its cancellation of its Ocean Wind projects in New Jersey and its abandoned effort to produce eco-friendly methanol in Sweden.
“Despite encouraging progress on our US offshore wind project Revolution Wind, the construction of the onshore substation for the project has been delayed,” Orsted’s CEO Mads Nipper said in reference to the delay. “This is, of course, unsatisfactory, and we continue our dedicated efforts to de-risk our portfolio.”
The delay at Revolution Wind was driven by soil contamination at an onshore transformer station, and resulted in an asset markdown of $310 million, or roughly 65% of the total impairment amount.
Orsted’s stock fell as much as 9% following the earnings announcement, according to Reuters.
The U.S. offshore wind industry has had a wave of project delays, missed production targets and public backlash in the past year.
New York State scrapped three offshore wind projects in April after failing to finalize power purchase agreements with developers. The failed efforts contributed to Democratic New York Gov. Kathy Hochul issuing an official review in July admitting the state was going to miss its goal of 70% renewable electricity by 2030.
A July report from the American Clean Power Association found there will only be 14 gigawatts of offshore wind production capacity deployed by 2030, less than half the Biden administration’s target.
The industry also came under fire in July after a broken wind turbine off the coast of Nantucket scattered debris into the ocean, resulting in multiple beach closures.
The Biden administration has provided billions of dollars in subsidies to the offshore wind industry, including to Orsted.
“We maintain a strong focus on de-risking project execution and prioritizing growth options with the highest potential for value creation,” Nipper said of Orsted’s first-half earnings results.
Orsted and the White House did not immediately respond to requests for comment.
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