Ørsted’s US impairment warning ‘negative for wind industry sentiment’

Ørsted warning that it may face heavy impairments linked to its US portfolio is “negative for sentiment across the [offshore wind] industry”, according to Deutsche Bank analyst Gael de-Bray.

The renewables major this week announced that it could face up to $2.3 billion in impairments, with its portfolio of near-term US offshore wind farms hit hardest. 

It cited supply chain delays, uncertainty over government support and higher interest rates.

In a research note, Deutsche Bank’s de-Bray noted that “unfavourable project economics and supply chain challenges have been a steady theme for the wind industry, particularly in Europe”.

These factors culminated in July with Vattenfall suspending work on its 1.3GW Norfolk Boreas project in UK waters as costs spiralled, de-Bray noted.

He added: “Until now, the US had been a ray of hope for wind, fueled by the Inflation Reduction Act and the resumption of renewable energy tax credits. 

“However, Ørsted's announcement shows that the ramp-up of wind energy in the US is also facing delays and additional costs, which is negative for sentiment across the industry.”

Since announcing the potential impairments after the Danish stock market closed on Tuesday (29 August), Ørsted’s share price fell 25% to a low of DKK 416.50, though it has since inched up in early trading today (31 August).

De-Bray noted that two of Ørsted’s three most-affected projects are due to feature Siemens Gamesa turbines, while the other is due to feature GE machines.

Siemens Energy – which now fully controls Siemens Gamesa – saw its share price slide 3.19% to a low of €13.02 after Ørsted’s announcement, though it has since recovered slightly, while GE’s share price has fallen 0.99% to $114.30.

Meanwhile, Vestas – which is not due to supply any of the impacted Ørsted projects – saw its share price fall 6.2% between the market closing on Tuesday and opening today, though it has since risen from a low of DKK 158.52.