Orsted cuts 2030 investment plan by 25%
Orsted, a Danish renewable energy company, announced on Wednesday that it had decided to reduce its 2030 investment plan by 25% as the offshore industry struggles with rising costs and issues in the supply chain.
The company will invest between 210 billion and 230 billion Danish Crowns ($29.32 to $32.12 billion), down from the previous target of around 270 billion Danish Crowns.
Orsted has also withdrawn its previous 2030 target of 35-38 gigawatts for renewable energy installed. This was less than a month after the company replaced its former top boss, Rasmus Errboe, with an insider.
"We will reduce our investment program towards 2030 by adopting a more strict, value-oriented approach to capital allocation. Errboe explained that this is done to maintain a strong balance sheet.
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Orsted stated that the cuts would not affect the group's current renewable energy projects. It added that the company will reduce its pace of construction and restructure its workforce.
The Danish renewable energy company has struggled with the U.S. market for offshore wind and had to take several impairment charges. The company stated on Wednesday that its U.S. Offshore Wind portfolio had led to pressure on its credit metrics.
The company anticipates that its earnings will increase between 29 billion and 33 billion Danish crowns by 2026. This excludes new partnerships and cancellation charges.
Orsted's troubles reflect the changing fortunes in wind power worldwide as rising costs, delays, and limited investment in the supply chain prompt investors to reassess energy transition speed.
The company on Wednesday exceeded its full-year estimates and reiterated it's goal to reinstate dividends in 2026. $1 = 7.1603 Danish crowns (Reporting and editing by Shailesh Kuber, Vijay Kishore, Maju Samuel).
(source: Reuters)
