Fitch Ratings has revised its outlook for Danish clean energy company Ørsted from stable to negative, citing adverse developments in its US offshore wind projects. The shift in outlook is primarily attributed to the unexpected challenges and disproportionate cancellation fees associated with the Ocean Wind 1 project.
Fitch Ratings has affirmed Ørsted's long-term issuer default rating at BBB+ but anticipates that the company will need to clarify its medium-to-long-term strategic goals and take specific measures to safeguard its net leverage in the coming months.
Ørsted made this announcement alongside its third-quarter results, revealing its decision to halt the development of two substantial offshore wind projects in the US: the 1,100-MW Ocean Wind 1 and the 1,148-MW Ocean Wind 2. These developments in the US offshore sector have resulted in the company booking an impairment charge of DKK 28.4 billion (equivalent to USD 4.06 billion or EUR 3.81 billion), surpassing its initial estimate of DKK 16 billion made in September.
The cancellation of Ocean Wind 1 has led to unexpectedly high supply-related cancellation fees, estimated by Ørsted at DKK 15 billion-18 billion, which equates to approximately EUR 2 million per MW and is expected to be incurred mainly in 2024.
Notably, S&P Global Ratings also took action by placing Ørsted on credit watch negative, citing the “severity of the loss of value relating to US offshore projects and the project management issues this reveals.” This further underscores the challenges the company is currently facing in the US offshore wind sector.
Ørsted's ability to navigate these challenges and outline a clear path forward will be closely watched by investors and industry observers in the renewable energy sector.