How the U.S. Market Went Sideways for a Wind-Power Giant

Source: By David Uberti and Joe Wallace, Wall Street Journal • Posted: Monday, November 20, 2023

Ørsted’s pullback from East Coast wind farms left the region scrambling

Turbines of Ørsted’s wind farm off Rhode Island are viewed from a tour boat flying the American flag.

Turbines of Ørsted’s wind farm off Rhode Island are viewed from a tour boat flying the American flag. DAVID GOLDMAN/ASSOCIATED PRESS

The poster child for the wind-power revolution was supposed to help build America’s clean-energy future. Its messy pullback from the Northeast is threatening those aspirations.

Denmark’s national oil-and-gas company, now known as Ørsted, bet big on renewables a decade ago. It renounced fossil fuels, renamed itself after a 19th-century physicist and embarked on a debt-fueled expansion, becoming the biggest offshore-wind developer outside China. Surfing investor enthusiasm for all things green, Ørsted surpassed BP  in market value early in the pandemic.

A hotbed of activity was the U.S., where Ørsted made a play at dominating the nascent wind market. The company lined up high-profile projects off the East Coast championed by Democratic-led states with ambitious climate targets.

Much of that work is at risk of running aground.

The company’s cancellation of two New Jersey wind farms on Halloween drew charges of incompetence from the governor and sparked what could be a $300 million legal spat. In New York, a pricing dispute has threatened to delay Albany’s renewable-energy goals. A New England utility partner is trying to unload stakes in three joint projects. Suppliers across the region are in limbo.

Ørsted might need to cancel more projects, sell parts of existing wind farms, or cut its dividend or issue stock to shore up its balance sheet, analysts and investors say. Any turnaround will come under a new-look C-suite after the chief financial officer and chief operating officer stepped down last week.

Ørsted’s stock has plunged more than 75% from its high in 2021, including a roughly 19% drop this quarter.

Similar upheaval is rippling across an industry that the Biden administration placed at the heart of America’s green-energy ambitions. Inflation drove up prices for turbines, labor and steel. Higher interest rates lifted financing costs. Creating an East Coast network of factories, ports, transmission lines and interconnection facilities—all while companies await a glacial permitting process—proved easier said than done.

Even in Europe, a capital-intensive industry that thrived when interest rates were low and costs fell year after year is in trouble. “I don’t think we are out of the woods,” said Manuel Losa of Pictet Asset Management, who sold Ørsted shares in 2021.

Ørsted was more vulnerable than most to a surge in inflation and interest rates because stiff competition had already driven down power prices and expected returns from offshore-wind projects, former executives say. Some analysts say higher prices planned for the next round of projects in New York and the U.K. could help the industry rebound and aid states in upgrading aging energy infrastructure.

“These are severe bumps on the road,” said Martin Neubert, Ørsted’s former chief commercial officer and now chief investment officer at Copenhagen Infrastructure Partners. “The case for offshore wind in the U.S. is still there and still strong,” he added. “A lot of ground has been gained.”

Ørsted’s difficulties have cascaded to Europe, where the company pulled out of a Norwegian offshore consortium. Analysts say Ørsted could even walk away from what would be the world’s biggest wind farm in the U.K. in order to defend its credit rating—though the company has said it is confident the project will go ahead.

Ørsted’s aggressive move into the U.S. landed the biggest blow: roughly $4 billion of write-downs last quarter.

That pain isn’t spread equally across projects, which have different construction timelines and pricing structures. The company built a small wind farm off Rhode Island, is developing another east of New York’s Long Island, and last month greenlighted a larger project for Rhode Island and Connecticut.

“The story of the U.S. offshore-wind industry for the last year has been one of great milestones, achievements, and monumental firsts, juxtaposed with a daily backdrop of frustrations and mounting challenges,” David Hardy, chief executive of Ørsted Americas, wrote this month.

Ørsted’s chief executive, Mads Nipper, left, with David Hardy, CEO of Ørsted Americas. Photo: Jennifer McDermott/Associated Press

Ørsted staged its biggest retreat in New Jersey. Gov. Phil Murphy billed the state as an offshore hub with tax incentives and infrastructure investments, including a “wind port” with space for towering turbine components and a wharf to handle huge installation vessels.

After Ørsted canceled projects called Ocean Wind 1 and 2, Murphy said the decision “is outrageous and calls into question the company’s credibility and competence.” The company is now trying to get out of paying $300 million in performance and investment guarantees to the state, arguing that it is no longer seeking tax relief from Trenton.

Still, company officials said the money was included in recent write-downs. A New Jersey official declined to comment on the sum, citing potential litigation.

The state has accelerated offshore-wind goals and locked in new projects despite Ørsted’s pullback, she said. It also intends to support local companies that had planned to supply the two projects.

“The biggest mistake, in hindsight, was that they went all out in the U.S.,” said Deepa Venkateswaran, an analyst at Bernstein. “It was not a market they knew, and they overcommitted.”

The about-face has created uncertainty for New Jersey communities. Crews laying transmission cables not far from the governor’s state-owned beach house on the Jersey Shore have continued work in recent days, said John Peterson Jr., mayor of nearby Seaside Park.

In Atlantic City, which has sought to diversify its casino-dependent economy, local officials expect Ørsted will complete a maintenance facility. It is unclear what to do with the site afterward.

“We were hoping that would lead to a lot of local hires,” city spokesman Andrew Kramer said.

The cancellations could saddle Ørsted with equipment it doesn’t need, such as huge steel tubes used as turbine foundations, or termination fees on supplier contracts. Chief Executive Mads Nipper told analysts that the company is trying to reuse such equipment.

As Ørsted made such calculations, it also faced delays on a first-of-its-kind U.S.-flagged vessel designed to transport parts the length of football fields and construct turbines in hundred-foot water. The company hoped to use the craft for two projects east of Long Island. But the holdup forced Ørsted to secure a potential backup plan: barges to ferry components from the shore to foreign-flagged installation vessels on site.

The tumult means the Northeast will pay more for power than previously advertised. After Ørsted, BP and Norway’s Equinor threatened to pull out of offshore wind farms in New York—putting three of the state’s eight approved plans in jeopardy—officials are reopening the bidding process. Analysts say newer projects tend to price electricity about 30% higher than earlier estimates.

Adrienne Downey, former head of the offshore-wind program at the New York State Energy Research and Development Authority, said pricing plans that account for potential inflation are crucial for the market to stabilize.

“Yes, we’ve made important progress in terms of contracting,” said Downey, now principal engineer and country manager at the offshore-wind company Hexagon. “But it’s easy to contract and excruciating to build.”

Write to David Uberti at and Joe Wallace at