Offshore Wind Powers Ørsted’s Green Switch

Ørsted reported a 74% jump in wind power division’s operating profit (EBITDA) in 2017, largely due to farm-downs of 50% of the Walney Extension and the Borkum Riffgrund 2 offshore wind farms.

The division’s EBITDA for 2017 was DKK 20.6 billion (EUR 2.8bn), with the earnings from the company’s operating offshore wind farms increasing by 45% year-on-year, helped by higher power prices and the inauguration of Burbo Bank Extension in the UK and Gode Wind 1 and 2 in Germany.

Image source: Ørsted

Offshore wind power generation increased by 42% compared to 2016, driven by Gode Wind 1 and 2 and Burbo Bank Extension as well as the start-up of power generation from Race Bank and Walney Extension. In addition, wind speeds were higher in 2017.

Overall, the company’s EBITDA for 2017 was DKK 22.5 billion, a 16% increase compared to 2016. The company’s net profit for the continuing part of the group increased by DKK 1.1 billion to DKK 13.3 billion in 2017.

”2017 was a financially strong year for us. We delivered our highest operating profit ever and achieved delivered performance across our business units. The farm-downs of Walney Extension and Borkum Riffgrund 2 also prove that our partnership model remains very attractive for institutional investors,” Ørsted’s CEO Henrik Poulsen said.

The share of renewable energy was increased by 14 %-points and now represents 64% of the overall heat and power generation. Ørsted’s target is for at least 95% of its heat and power generation in 2023 to be green.

“In 2017, we took decisive steps towards completing our strategic transformation to a green energy company. We continued our build-out of green energy generation from offshore wind and biomass, we divested our oil and gas business, and we made the decision to be coal-free by 2023. It was also the year when we won projects both in Germany and the UK, and for the first time offshore wind was able to compete on cost with new-builds of coal- and gas-fired power stations,” Poulsen said.

Looking ahead, Ørsted expects gross investments for 2018 to amount to DKK 16-18 billion, reflecting, among other, a high level of activity related to offshore wind farm projects.

”We are making good progress in the strategic expansion of our offshore wind business. In November, a panel of experts under the Taiwanese environmental authorities recommended granting environmental permits to our four offshore wind projects in Greater Changhua. In December, we submitted our first bid for an offshore wind farm project in the USA. The bid concerns the Bay State Wind project in Massachusetts, where we want to construct an offshore wind farm together with our partner, Eversource Energy. In the coming years, we will pursue our objective of continued build-out of offshore wind,” Poulsen said.

From 2018 onward, Ørsted will change its guidance method to only include the effect from existing offshore wind partnership agreements and not the effect from partnership agreements the company expected to conclude during the given year.