Orsted has announced it is exiting several offshore markets (including Norway, Spain, and Portugal) and deprioritising development activities in Japan, in order reduce development costs and create further strategic market focus.
The Danish developer is also planning for leaner development within floating offshore wind and P2X.
Project cancellations and phasing of capital expenditure across the portfolio will result in around DKK35bn (€4.7bn) of capital expenditure relief in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023, Orsted said.
As a result of the review, Orsted now believes that it has a more robust portfolio of projects, and it has refocused its offshore strategy for the US.
As previously communicated, Orsted has ceased the development of the offshore wind projects Ocean Wind 1 and Ocean Wind 2 in the form that they were awarded by the New Jersey Board of Public Utilities, has decided to reposition the offshore wind project Skipjack Wind in the US, and will primarily focus its US offshore portfolio towards the North-East Atlantic.
The portfolio changes will result in an estimated DKK3bn of development expenditure reductions in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023.
Besides reducing capital expenditure and project development costs, Orsted pauses dividends for the financial years 2023-2025.
Furthermore, it will accelerate its divestment programme.
Farm-downs and divestments are expected to contribute with proceeds of around DKK115bn towards 2030, of which approx. DKK70-80bn are expected in 2024-2026.
In addition, Orsted will look at measures to become a leaner and more efficient organisation and has set a target to reduce its fixed costs by DKK1bn by 2026 compared to 2023, on a like-for-like basis.
This will include a reduction of 600-800 positions globally.
Not all reductions will result in redundancies, the developer said, but there will be redundancies throughout 2024,
Orsted added that around 250 people globally will be made redundant and leave the company within the coming months.
Mads Nipper, group president and chief executive of Orsted, said: “We have prioritised projects within our portfolio and are implementing significant changes in our business, including revising our operating model to reduce risks.
“We now present a robust business plan, and with an uncompromising focus on value creation, we plan to more than double our current installed capacity of renewable energy by 2030.”