Energy
Wednesday, November 1st, 2023 4:31 pm EDT
Key Points
- Orsted, a Danish wind power developer, is canceling two offshore wind projects off the coast of New Jersey and taking a $4 billion impairment for the first nine months of the year. An additional provision of up to $1.55 billion for potential contract cancellation fees could bring the total write-off to over $5.55 billion.
- The cancellation is attributed to significant adverse developments, including supply chain challenges, delays in project schedules, and rising interest rates, as stated by Orsted CEO Mads Nipper. The most substantial part of the $4 billion writedown, $2.8 billion, is connected to the Ocean Wind 1 project.
- Ocean Wind 1, which would have been New Jersey’s first offshore wind farm, is designed to generate electricity for half a million homes and consist of 98 turbines located 15 miles off the coast of southern New Jersey. Construction, initially scheduled for this fall, was expected to make the project operational in 2025. Despite these cancellations, Orsted emphasizes its commitment to the U.S. renewables market and the offshore wind industry, with the Revolution Wind project moving into the construction phase.
The Danish wind power developer Orsted has canceled two offshore wind projects off the coast of New Jersey and is taking a $4 billion impairment for the first nine months of the year. Additionally, the company has set aside an extra provision of up to $1.55 billion for potential contract cancellation fees, making the total write-off potentially exceed $5.55 billion. CEO Mads Nipper cited significant adverse developments related to supply chain challenges, project schedule delays, and rising interest rates as the reasons for the project cancellations. Of the $4 billion writedown, $2.8 billion was associated with the Ocean Wind 1 project, which would have been New Jersey’s first offshore wind farm, generating electricity for half a million homes and consisting of 98 turbines located 15 miles off the coast of southern New Jersey. Construction was initially scheduled to start this fall, with the project becoming operational in 2025. Orsted expressed its commitment to the U.S. renewables market and offshore wind industry, emphasizing that the Revolution Wind project is moving into the construction phase. This joint project with Revolution Wind and Eversource will be located over 32 miles southeast of the Connecticut coast. Orsted also has ongoing projects in Maryland, New York, and Rhode Island. Orsted had previously signaled to investors that it would face financial impairments, and further negative developments led to the increased impairment. Orsted is headquartered in Denmark, employs 8,700 people, and had revenue of $18.7 billion in 2022.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/01/orsted-axes-two-new-jersey-wind-projects-takes-4-billion-writedown.html
