Orsted thud in Copenhagen after US halt to almost completed wind power project

(Il Sole 24 Ore Radiocor) - New battle for Orsted on the Copenhagen Stock Exchange and once again it comes from the US. The stock of the world's number one offshore wind farm suffered a heavy drop, sending it to the bottom of the Stoxx Europe 600 index, after US authorities ordered a halt to work on an almost completed project. The stop jeopardises the success of the DKK 60 billion capital increase announced on 11 August by the Danish company to address the difficulties caused by the US decisions.

The Trump administration, through the Bureau of Ocean Energy Management (BoEM), issued a stop work order on Friday evening, forcing Orsted to suspend the Revolution Wind project, off the Rhode Island coast,already 80% complete with 45 of the 65 planned wind turbines already installed. Despite the US administration's decision and the risks involved, Orsted has announced that it will go ahead with its capital increase plan, backed by the support of the Danish government, a 50.1% shareholder in the company. "The capital increase has been calibrated to strengthen Orsted's financial structure and enable it to implement its business plan, while taking into account the uncertainty surrounding Orsted's offshore wind portfolio in the US," the group said in a note.

Analysts, however, are sceptical. The halt in the US 'is a significant impediment to raising capital', indicated analysts at Sydbank, saying they were 'stunned' by the US decision. For the experts at AlphaValue, the suspension of the project in the US could jeopardise the success of the equity offering. "This news was a blow and represents a true political hostage-taking by the US administration, given the project's progress," they said. Since taking office in January, Donald Trump has suspended all new offshore wind concessions after repeatedly criticising wind power during the election campaign, calling it ugly, unreliable and expensive. The administration also introduced new regulations that will cut subsidies for the green energy sector.

As the statement issued by Orsted points out, Revolution Wind is a 50/50 joint venture with Skyborn Renewables, a subsidiary of Blackrock. The project has received 'all required permits, both at the federal and state level', following a file that began 'nine years ago'. Orsted is 'considering all options to resolve the matter through dialogue with the relevant agencies and possibly through legal action'. The company also states thatthe investment required to complete the project amounts to 5 billion kroner for Orsted. The shareholders' meeting on 5 September to approve the capital increase was confirmed and the group also appointed the banking syndicate for the capital increase. Bnp Paribas, Danske Bank and Jp Morh are joint global co-ordinators alongside Morgan Stanley. BofA Securities and Goldman Sachs are joint bookrunners. The Orsted share lost 45% of its value in August.