Orsted Still Sees a Strong Future for Offshore Wind in Europe

 

Western offshore wind leader Orsted sees signs of hope in the European market, despite near-term headwinds in the global market, executives said in a third-quarter earnings call on Wednesday. 

"We remain very bullish about the prospects for offshore wind in Europe, in particular. We see the rebasing happening in the market," said Rasmus Errboe, Group President and CEO. "We will be patient, and we will prioritize value over volume."

Errboe highlighted three potential business areas for growth in Europe: maturing Orsted's existing pipeline of project options; partnerships and M&A for specific projects; and competing in centralized tenders. "2026 is probably going to be a bit on the low side in terms of numbers of tenders that are being put out there. But then from 2027 onwards it would take a bit of a step change," he said, highlighting expected leasing activity in the UK, the Netherlands, and Germany.

Equinor swung to a loss of $260 million in the third quarter, including impairment charges of about $175 million - a better result than analysts had expected, but a clear setback compared with last year's performance. Regulatory setbacks in the United States (including the stop-work order on Revolution Wind) and high American tariffs are among the firm's challenges.

To adapt to global challenges for offshore wind, Orsted's leaders have embarked on a muscular strategy to stabilize finances: since May, the firm has announced plans to lay off 2,000 employees; raised $9 billion in a heavily discounted rights issue; canceled the costly Hornsea 4 project; and sold half of its giant Hornsea 3 project for $6 billion to Apollo Global Management. The latter move is expected to raise enough cash to stave off a possible credit downgrade; one further drop from S&P could prompt some institutional investors to sell the company's bonds. 

Many market analysts have speculated that a tie-up between Orsted and Norwegian state energy firm Equinor's offshore wind division would produce synergies and reduce competition, giving Orsted a leg up. For Equinor, divesting its renewables division would allow it to refocus on its core oil and gas business after a bruising experience with offshore wind in the United States. However, Errboe firmly ruled out the possibility.

"That is not in our plans," Errboe said. "Our focus, my focus, is to deliver on our plans, on our strategy, quarter by quarter."