Orsted has booked impairments over construction delays and higher costs affecting its US offshore wind business.
The company has revealed three Q4 2024 charges totalling €1.6bn (Dkr12.1bn) relating to various issues, including a Dkr4.3bn hit due on the 924MW Sunrise Wind (pictured) project.
The developer now expects commissioning of the wind farm to slip from the end of 2026 into the second quarter of 2027.
This is partly due to an updated installation expectation for the first-ever US offshore HVDC system, including finalisation and installation of the jacket and export cables, the company said.
It has also reassessed the turbine installation rate following work at Revolution Wind and believes it will now incur delays and increased costs.
“These developments, combined with considerably increased project costs relating especially to the monopile foundations to keep fabrication and installation on track, have led to higher cost expectations related to the execution of the Sunrise Wind project,” it said.
During the fourth quarter, the development of the long-dated US interest rates meanwhile led to a 75-basis-point increase in the weighted average cost of capital, the company said.
This increase adversely impacted the value-in-use for the US portfolio, primarily the offshore wind projects, leading to an impairment of Dkr4.3bn.
“Market-informed valuation indications” for seabed leases located off the coasts of New Jersey, Maryland, and Delaware also lead to an impairment of Dkr3.5bn
The cost hits put operating profit for 2024 of Dkr24.8bn, which it said was still in line with guidance.
Chief executive Mads Nipper said the impairments and construction challenges are “very disappointing”.
“We are, however, encouraged by the performance of our operations, and we’re confirming our full-year EBITDA guidance, supported by the increasing power production from our growing global fleet of renewable energy assets,” he said.
“We remain committed to the US market in the long term with its potential for renewables to meet the growing electricity demand and create thousands of industrial jobs across the US.
“We continue to navigate the complexities and uncertainties we face in a nascent offshore industry in the new US market. Our dedicated efforts to strengthen execution and navigate supply chain challenges will continue.
“We’re working diligently and in close collaboration with our suppliers to manage the remaining risks impacting the construction of Sunrise Wind. Delivering the project within the updated schedule and cost is an absolute top priority for Ørsted.
“Including these adverse developments, the Sunrise Wind project is still profitable with a mid-single-digit lifecycle IRR and an attractive forward-looking IRR based on current assumptions. With enough offshore wind energy to power nearly 600,000 domestic homes, Sunrise Wind will create hundreds of long-term US-based jobs and build a statewide renewable energy economy that will energise New York for decades to come.”