Windpower Monthly takes a look at the new man in charge and the challenges he faces.
Ørsted has looked beyond the power sector in selecting outgoing CEO Henrik Poulsen’s successor.
Mads Nipper leaves Danish pump manufacturer Grundfos after six years as the company’s CEO and group president, with Ørsted unveiling their next CEO as the developer increasingly feels the impacts of the coronavirus pandemic.
During his Grundfos tenure, Nipper championed sustainability goals and oversaw continued profitability – likely attractive credentials for offshore wind giant Ørsted.
However, the company also announced in September 2020 that it would cut about 600 jobs worldwide due to “changing customer needs”. It currently employs about 19,500 people worldwide.
He also set ambitious sustainability targets last year – aiming for Grundfos to halve its carbon footprint and water consumption by 2025 (from 2008 levels), before becoming “climate positive” by 2030.
To meet its ‘climate positive’ target, Nipper’s former company must not only have net-zero carbon emissions, but also remove additional carbon dioxide from the atmosphere by the end of the decade.
This long-term vision and ambition aligns with Ørsted’s goals. His new company aims to reach carbon neutrality by 2025, before removing all carbon emissions across its supply chain and energy trading by 2040.
A fan of AC/DC (the Australian rock band, not the electricity, necessarily) and Liverpool FC, Nipper will need to develop strategies for meeting these targets in the coming years, while getting to grips the energy sector.
In a gushing LinkedIn post announcing his decision to join the Danish developer, Nipper nodded to Ørsted being named the world’s most sustainable company earlier this year by Corporate Knights and wrote with excitement about being “one of the catalysts driving change towards a world that runs entirely on renewable energy”.
Within a year of Nipper starting as Grundfos' CEO, the pump manufacturer won an award at the UN’s 2015 Paris Climate Change Conference for helping to alleviate the challenges caused by climate change.
Specifically, it was recognised for deploying solar-powered technology to provide people in Kenya and Uganda with clean drinking water.
And in 2016, Nipper addressed the UN on how Grundfos lived by the global body’s sustainability goals, telling the audience: “Sustainability and responsibility are not a department or a report. It is the very essence in every company, who wants to think ahead and accomplish something greater than just creating short-term profit.”
During his tenure, Nipper has also overseen continued profitability and rises in Grundfos’ share price.
In six years, Grundfos shares have nearly doubled in price, from DKK 599 (€80) in May 2014 to DKK 1,160.40 (€156) on 1 May 2020.
The rate – effective for a full fiscal year – climbed through Nipper’s time with the company, except for a fall in 2019, before a recovery in 2020.
Grundfos also recorded a profit in each of the six financial years he spent with the company, and turned around a declining trend in profitability inherited in 2014.
Its profits were squeezed in the first half of 2020 as the coronavirus pandemic hit – mirroring Ørsted’s fortunes this year. The developer’s own profits were squeezed in H1 2020 with its net result in the second quarter pushed into a loss as the effects of the pandemic increased.
Nipper may need to steady the ship and will have to ensure the world’s biggest offshore wind developer can maintain profitability in 2021.
He will also need to do this despite growing competition in the increasingly global offshore wind sector – and choose which markets to participate in and which ones to leave – amid increasing cost pressures and logistical challenges created by Covid-19.
The coronavirus pandemic has caused all companies to reassess and change their strategies, and Nipper will likely still have to contend with the challenges it poses when he takes over in January.
Ørsted was hit by reduced power demand pushing down wholesale prices in Q2 and has also flagged suppliers facing difficulties in delivering critical components to projects and hindering construction schedules as potential challenges.
Nipper will likely need a strategy for navigating these obstacles in the new year.