Denmark

Denmark

Ørsted CEO Nipper 'optimistic' for long-term future of US market

In his first financial results conference call as Ørsted CEO, Mads Nipper told reporters about the company's expectations and strategies for the US and UK markets, floating offshore wind, and possible stake sales

Ørsted CEO Mads Nipper started in his new role on 1 January 2021
Ørsted CEO Mads Nipper started in his new role on 1 January 2021

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Ørsted is encouraged by the new Joe Biden administration in the US, having seen positive signals in early policy announcements and an apparent quickening in approval processes for offshore wind farms.

The developer’s new CEO, Mads Nipper, told reporters that there had been recent progress in the permitting process for both its 132MW South Fork South Fork (132MW) Offshoreoff Long Island, New York, USA, North America Click to see full details and 1148MW Ocean Wind 2 Ocean Wind 2 (1148MW) Offshoreoff Atlantic City, New Jersey, USA, North America Click to see full details projects off the US’s east coast.

The US’ Bureau of Ocean Energy Management (BOEM) recently launched a public consultation on the environmental impact of the South Fork project off New York.

And Nipper confirmed its Ocean Wind project is now also in the early stages of the permitting process. 

He added that Ørsted was also encouraged by the one-year extension agreed for the US’ production tax credit (PTC) scheme for onshore wind farms and fixing of the value of the investment tax credit (ITC) for offshore wind farms late last year.

“We are more optimistic than we were just a couple of months ago that the approvals process will pick up speed for us, but also for some of our competitors,” Nipper told reporters in a conference call following the publication of the Danish energy giant’s full-year financial results

“What we are seeing with the ambition, the tax credit support and the early signs of the approval procedures gaining speed is something that gives us confidence for the long-term potential of the US market.”

Late last year, Ørsted agreed a deal to sell a 25% stake in its Ocean Wind project off New Jersey, with a deal due to close in the first half of 2021.

Further transactions may follow, according to chief financial officer Marianne Wiinholt, as the developer seeks to use proceeds from stake sales to fund further growth.

It may also look at selling stakes non-subsidised wind farms and pursuing further corporate power purchase agreements to avoid merchant risk, she told reporters.

Floating future?

In his first financial results conference call as Ørsted CEO, Nipper said that the developer will consider using floating foundations for potential projects in some areas, including California and Scotland.

However, he believes there is still a lot of potential for offshore wind growth with bottom-fixed foundations.

“We will continue our ambitious growth in bottom-fixed, but we will surely also be pursuing opportunities where floating is an option,” Nipper said.

Fossil-fuel market entrants

He also welcomed both competition and collaboration with fossil-fuel giants – including the likes of BP, Shell and Total – who have made inroads into the offshore wind segment in recent years.

He said: “It’s very important that there are many actors who are willing, and who will participate in [the growth of the global offshore wind market]. 

“This will accelerate the green transformation, and this is something that we see positively.

“Competition will likely increase, but we don’t think this is something that will be bad for the industry. We are confident that with our experience and our capabilities,  we can uphold our leading position in the market.”

Supply chains and community engagement

Nipper did not appear concerned about the potential loss of power deals if developers fail to comply with local content plans submitted as part of the UK’s upcoming contracts for difference tender later this year.

"We don’t think it will impact our position as market leader,” he told reporters.

“It’s very important to have local supply chains to ensure we engage communities when we come into these projects.

“It’s fully understandable that there is a focus on creating work in a post-Covid economy, and any commitment we give, we will honour.”

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