European wind energy and renewable companies faced pressure on Monday after President Trump signed an executive order halting U.S. offshore wind lease sales in federal waters temporarily. This added to the industry’s troubles, with Danish offshore wind developer Orsted reporting impairment charges that surpassed Wall Street expectations.
Orsted’s stock plummeted by as much as 18% in Copenhagen, marking its biggest drop since November 2023, after the company revealed a 12.1 billion Danish kroner ($1.68 billion) impairment charge linked to its struggling U.S. division. CEO Mads Nipper expressed disappointment, stating, “The impairments announced today, and especially the continued construction challenges, are very disappointing.” He added, “We remain committed to the U.S. market in the long term, seeing its potential for renewables to meet growing electricity demand and create thousands of industrial jobs across the country. We continue to navigate the complexities and uncertainties in the emerging offshore industry in the U.S.”
Orsted cited factors like rising interest rates, seabed leases, and the delays in its Sunrise Wind project off the coast of Montauk, New York, which contributed to the $1.68 billion impairment charge in the fourth quarter of 2024.
Goldman Sachs analysts, Alberto Gandolfi, Mafalda Pombeiro, and Dhwani Khenwar, called Orsted’s announcement a “surprise” and warned of further risks. They pointed to higher interest rates, issues with U.S. seabeds, and additional delays with Sunrise Wind, now expected in late 2027. Despite maintaining an “in line” 2024 EBITDA forecast, they noted that these impairments could negatively affect the company’s stock price. They also warned about potential additional impairments if the U.S. fails to provide ITC bonuses or introduces import tariffs on offshore activities.
Orsted’s struggles were further compounded by Trump’s executive order, which suspended new offshore wind lease sales and halted approvals, permits, and loans for both onshore and offshore wind projects. This move sent shares of renewable energy companies lower, with iShares Global Clean Energy ETF (ICLN) dipping slightly in premarket trading. The ETF has been declining for over three months amid concerns that Trump will scale back green energy spending.
Across Wall Street, analysts expressed concerns about Orsted’s situation, amplified by Trump’s order, which signaled greater risks for U.S. offshore wind and renewable energy industries.
Citi analyst Jenny Ping noted that the impairment figures were larger than expected, with the Sunrise Wind project’s delays and cost escalation being particularly damaging. She emphasized that these developments come at a time when the sector faces political risks, which could further erode investor confidence.
RBC analyst Alexander Wheeler acknowledged Orsted’s continued commitment to the U.S. market but suggested that the company’s repeated challenges with U.S. projects would likely fail to reassure investors.
Jefferies analyst Ahmed Farman pointed out that Orsted’s impairment of 12.1 billion Danish kroner represents 9% of its market capitalization, though some of it had already been priced in, particularly regarding interest rates. He expressed disappointment over the Sunrise Wind impairment, seeing it as a sign of the risks involved in U.S. offshore wind projects.
Barclays analyst Dominic Nash noted that the scale of the impairments was larger than expected and highlighted that this was Orsted’s third major profit warning since January 2023. He raised concerns about the risks for U.S. offshore wind, especially with Trump’s policies, which could potentially stall offshore wind development and decrease the value of seabed leases.
Trump’s Monday statement summed up the situation: “We’re not going to do the wind thing.” The announcement has cast a shadow over the green energy sector, raising doubts about its future in the face of shifting political priorities under Trump’s leadership.
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