Ørsted Report Impairment Charges of $1.69 Billion in Q4-2024

Ørsted, the Danish multinational energy company and offshore wind power developer, on Monday said that the company has incurred an impairment charge of $1.69 billion in the fourth quarter of 2024 due to delay and higher costs for its Sunrise Wind project in the US.

Ørsted CEO Mads Nipper, while disclosing the impairment charge in a bourse filing on Monday evening, said: “The impairments that we have announced today – and especially the continued construction challenges – are very disappointing.”

However, the CEO emphasised that the management is satisfied with the operational development.

The development in long-term US interest rates has led to an increase in the average cost of capital during the fourth quarter of 2024. This has had a negative impact on the value of the company’s US portfolio – primarily the offshore wind projects and this factor resulted in an impairment of $600 million.

In addition, Ørsted’s seabed areas off the coasts of New Jersey, Maryland and Delaware have been written down by $490 million. This reflected, among other things, the current uncertainties in the market, Ørsted said in the filing.

The company has also postponed the expected commissioning of the Sunrise Wind project to the second half of 2027. This results in an impairment of $600 million.

The company said that the Sunrise Wind project was progressing on a tight construction schedule and was navigating challenges related to supply chain and construction. The project follows on from Revolution Wind, which is currently under construction, including offshore installation work. “Implementing learnings from Revolution Wind, such as the wind turbine installation rate, has led to a reassessment of the Sunrise Wind project to include schedule delays and increased costs, Ørsted said.

Additionally, it has updated the installation expectations for the first-ever US offshore HVDC system, including finalisation and installation of the jacket and export cables. The expected commissioning of the project has consequently been delayed into the second half of 2027.

These developments, combined with considerably increased project costs relating especially to the mono-pile foundations to keep fabrication and installation on track, have led to higher cost expectations related to the execution of the Sunrise Wind project.

Committed to US Market

Nipper said that they remain committed to the US market in the long term with its potential for renewables to meet the growing electricity demand and create thousands of industrial jobs across the US.

“We continue to navigate the complexities and uncertainties we face in a nascent offshore industry in the new US market. Our dedicated efforts to strengthen execution and navigate supply chain challenges will continue. We are working diligently and in close collaboration with our suppliers to manage the remaining risks impacting the construction of Sunrise Wind. Delivering the project within the updated schedule and cost is an absolute top priority for Ørsted,” he explained.

He said that including these adverse developments, the Sunrise Wind project is still profitable with a mid-single-digit lifecycle IRR and an attractive forward-looking IRR based on current assumptions. With enough offshore wind energy to power nearly 600,000 domestic homes, Sunrise Wind will create hundreds of long-term US-based jobs and build a statewide renewable energy economy that will energise New York for decades to come, he added.

This is not the first time that Ørsted has been hit by billion-dollar write-downs. In the fall of 2023, the company dropped plans to build the Ocean Wind 1 and 2 wind farms in the US because the projects had become much more expensive to build due to delays in supply chains and rising interest rates. In this connection, the total write-downs amounted to $3.95 billion.