Orsted, the Danish renewable energy developer, has revised its investment strategy for the remainder of the decade, cutting its planned spending by approximately 25% to address challenges in its US offshore wind projects and other market factors. The company now plans to invest between €28.2 billion and €30.8 billion (Dkr 210-230 billion) through 2030, a reduction from its previous forecast.
As part of this shift, Orsted has abandoned its earlier targets of 35-38GW of installed renewable capacity by 2030 and a projected EBITDA (excluding new partnerships) of Dkr 39-43 billion. Despite this adjustment, the company expects to move forward with its 8.4GW offshore wind construction programme, which will nearly double its current offshore wind capacity.
Orsted reported an operating profit of Dkr 32 billion (€4 billion) for 2024, a significant increase from just under Dkr 19 billion in 2023, driven by a boost in earnings from its offshore wind farm operations. Earnings from offshore sites reached Dkr 23.8 billion, a Dkr 3.6 billion increase from the previous year, fueled by the ramp-up of projects like Greater Changhua 1&2a (Taiwan), South Fork (US), and Gode Wind 3 (Europe), as well as higher wind speeds and prices on inflation-indexed CfDs and green certificates.
While around 9GW of projects currently under construction will not be affected by the revised investment plan, Orsted will take a “focused approach” to capital allocation, prioritising regions and technologies that offer the most attractive value-creation potential. The company also aims to achieve more than the Dkr 1 billion in savings it has already planned.
Rasmus Errboe, Chief Executive Officer, explained, “We'll reduce our investment programme towards 2030 through a stricter, more value-focused approach to capital allocation. We do this to ensure a stronger balance sheet, supporting a solid investment grade rating, and to ensure that we only invest our capital in the most financially attractive opportunities.”
Errboe also emphasized that Orsted remains committed to its 8.4GW offshore wind construction programme, stating, “Our number one priority throughout the next three years will be to deliver on our committed 8.4GW offshore wind construction programme, which will almost double our installed offshore wind capacity. The market remains challenging, but delivering on this programme will solidify our position as the undisputed global leader in offshore wind.”
Orsted's revised business plan is designed to improve credit metrics through a self-funded strategy, relying on the reduction in its investment programme, the execution of construction projects as planned, and the delivery of its divestment programme. The company intends to finance this plan through a mix of operating cash flow, partnerships, divestments, tax equity, and debt issuances, without raising new equity. Orsted projects its EBITDA for 2024, excluding new partnerships and cancellation fees, to be Dkr 24.8 billion, in line with expectations.
