COPENHAGEN – Danish energy company Ørsted A/S has announced major losses worth DKK 12.1 billion ($1.7 billion) for the fourth quarter of 2024, attributing financial failures to an increase in US interest, a decrease in the value of seabed leases, and an increase in Sunrise’s implementation costs. Wind project.

The impairments were primarily due to a 75-basis-point increase in the weighted average cost of capital influenced by an increase in long-term interest rates in the US. This increase significantly affected the value of Ørsted’s US offshore wind projects, resulting in a DKK 4.3 billion impairment. In addition, the company recognized a DKK 3.5 billion impairment on seabed leases off the coasts of New Jersey, Maryland, and Delaware, citing prevailing market uncertainty.

Challenges in the construction of the Sunrise Wind project, including supply chain issues and the need for additional costs to keep on schedule, largely contributed to a DKK 4.3 billion impairment. The commissioning of the project is delayed to the second half of 2027.

Despite these setbacks, Ørsted’s preliminary and unaudited EBITDA for 2024 is reported to be DKK 24.8 billion, which is in line with the company’s latest guidance. Operating revenues from the offshore and onshore sectors were in line with expectations and were the main contributors to this figure.

Mads Nipper, Group President and CEO of Ørsted, expressed disappointment at the construction challenges but remained optimistic about the company’s operational performance and long-term commitment to the US market. Nipper emphasized the strategic value of the seabed leases and the importance of the Sunrise Wind project, which is expected to generate enough offshore wind power to power nearly 600,000 homes. in the US and will create hundreds of jobs.

Despite the handicaps, Nipper maintains that the Sunrise Wind project is still profitable, with a mid-single-digit lifecycle IRR (Internal Rate of Return) and an attractive forward-looking IRR base. in current assumptions.

Ørsted is scheduled to host an investor and analyst call on January 21, 2025, to discuss impairments and its 2024 EBITDA. The company will publish its annual report for 2024 on February 6, 2025. This article is based on a press release from Ørsted.

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