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Ørsted Withdraws from Norwegian Partnership as it Realigns Wind Portfolio

offshore wind farm
Ørsted abandon its partnership to enter the Norwegian offshore wind market (file photo)

Published Nov 13, 2023 6:06 PM by The Maritime Executive


Two days before the deadline to submit proposals to pre-qualify for Norway’s first offshore wind auctions, a partnership that was looking to compete for the licenses reports that Danish offshore wind giant Ørsted has withdrawn. This comes two weeks after Ørsted doubled its write-off as it abandons some of its U.S. wind projects and warned that the company’s capital structure would be negatively impacted.

Just over two years ago, Norway’s Bonheur group announced that Ørsted was joining a partnership along its Fred. Olsen Seawind division and Hafslund to compete in Norway’s upcoming application round for offshore wind areas. The three companies were equal partners in Blaavinge reporting that they would be applying for the licenses being offered by Norway as the country seeks to jumpstart its offshore wind industry.  The Norwegian part of the North Sea holds great potential for the development of large-scale offshore wind farms, and in addition to their experience with fixed-bottom wind turbines, the companies reported they were focusing on the emerging opportunities in floating wind turbines.

Bonheur wrote in a stock exchange filing today, “Ørsted have informed us that due to a prioritization of investments in the portfolio, they will withdraw from pursuing participation in offshore wind developments in Norway, and therefore their participation in the partnership will discontinue.”

Ørsted responded to inquiries from Reuters and Bloomberg reporting that it is “carefully prioritizing our investments and therefore adjusting business development and bidding activities.” As part of the review, they said the company has decided “not to prioritize” development in the Norwegian market.

Norway has been moving slowly as it works to launch its first two projects. Utsira Nord will focus on floating wind while Sørlige Nordsjø II will be fixed bottom. Companies were due to submit expressions of interest to Norway by November 15 as the government works to qualify participants. A date has not yet been set for the auction.

Ørsted cited increasing costs and supply chain problems including a shortage of installation vessels for its decision to cancel two large offshore wind farms that were to be built off New Jersey. The first project had completed permitting and was moving forward with the write-off for that project expected to top $2.8 billion. The company took a total charge of $4 billion in the third quarter of 2023 while warning that additional contracts and costs might add as much as $1.5 for a total impairment of approximately $5.5 billion. They also said the decisions would negatively impact the company’s capital structure and that the company would be looking at “cost-saving initiatives and other steps in part to address the potential impact on the company’s credit rating.”

The decision not to proceed as the Norwegian market begins to develop is seen as a consequence of the decision to end the company’s U.S. projects. 

Fred. Olsen Seawind and Hafslund plan to continue to compete as the Norwegian process moves forward. The companies reported they would be pursuing the Utsira Nord project but would not be in a position to pursue the second fixed-bottom project. They also look to continue to seek future opportunities in Norway and neighboring countries.