Danish Offshore Wind Giant Exits Markets, Axes Renewable Energy Targets, and Reduces Positions

Business & Finance

February 7, 2024, by Adnan Memija

Denmark-headquartered Ørsted has revealed a substantial revision of its plans, including a reduced 2030 renewable energy target, job cuts, exit from several markets, and “leaner development” within floating offshore wind and Power-to-X.

As a result of the business plan approved by Ørsted’s Board of Directors, Ørsted has updated its ambition for installed renewable capacity from approx. 50 GW to 35-38 GW by 2030, which will be more than double its current installed capacity of 15.7 GW.

By 2026, the company expects to have an installed capacity of about 23 GW.

Ørsted Exiting Several European Offshore Markets, Shifts Its Focus in US

Project cancellations and phasing of capital expenditure across the portfolio will result in approx. DKK 35 billion (about EUR 4.6 billion) of capital expenditure relief in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023, said the company.

As a result of the review, the offshore wind developer now believes that it has a more robust portfolio of projects, and it has refocused its offshore strategy for the US.

As previously announced, Ørsted has ceased the development of the Ocean Wind 1 and Ocean Wind 2 offshore wind projects in the US, has decided to reposition the Skipjack Wind project, and will primarily focus its US offshore portfolio towards the North-East Atlantic.

In addition, the company is exiting several offshore markets, including Norway, Spain and Portugal, deprioritising development activities in Japan, and planning for a “leaner development” within floating offshore wind and P2X.

The portfolio changes will result in approx. DKK 3 billion (about EUR 402 million) of development expenditure reductions in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023, Ørsted said.

Ørsted to Cut Jobs Globally in 2024

Besides reducing capital expenditure and project development costs, Ørsted pauses dividends for the financial years 2023-2025.

Furthermore, the company said it will accelerate its divestment programme with farm-downs and divestments expected to contribute with proceedings of approx. DKK 115 billion (about EUR 15.4 billion) towards 2030, of which about DKK 70-80 billion (approx. EUR 9.3-10.7 billion) are expected in 2024-2026.

Ørsted has also set a target to reduce its fixed costs by DKK 1 billion (approx. EUR 134 million) by 2026 compared to 2023, on a like-for-like basis, which will include a reduction of 600-800 positions globally.

Not all reductions will result in redundancies, the company said, but there will be redundancies throughout 2024. Ørsted revealed today that approximately 250 people globally will be redundant and leave the company within the coming months.

“In order to improve our competitiveness, ensure value creation, and ensure our ability to attract capital to the renewable build-out, we will make Ørsted a leaner and more efficient company,” said Mads Nipper, Group President and CEO of Ørsted.