Orsted Slashes Its Investments by 25% Till 2030

Despite delivering full-year results in 2024 in line with expectations and the strategic progress, Denmark’s largest energy firm Orsted has announced reduction in its investment programme by around 25% towards 2030.

The reduced investment programme is in line with the company’s commitment to ensure a capital structure that can support a solid investment grade credit rating.

The company reached an EBITDA excluding new partnerships and cancellation fees of $3.45 billion, but has experienced wider renewable industry challenges, especially related to the US offshore wind portfolio, which have led to further pressure on its credit metric.

It may be recalled that the US government under Donald Trump’s Presidency has been opposing wind farms on the ground that they occupied huge chunks of land and also posing a threat to the birds.

In addition, Orsted said that commissioning of 2.4 GW of renewable capacity took place, 3.5 GW of offshore wind capacity was awarded in the UK, and the final investment decision on the offshore wind farm Baltica 2 in Poland was made last week. All of which contributed to the strategic progress of the company.

Orsted’s Group President and CEO Rasmus Errboe said that they will reduce investment programme towards 2030 through a stricter, more value-focused approach to capital allocation. They were doing this to ensure a stronger balance sheet, supporting a solid investment grade rating, and to ensure that they only invest their capital in the most financially attractive opportunities.

“Our number one priority throughout the next three years will be to deliver on our committed 8.4 GW offshore wind construction programme, which will almost double our installed offshore wind capacity. The market remains challenging, but delivering on this programme will solidify our position as the undisputed global leader in offshore wind,” he said.

Self-Funded Business Plan

Improving the credit metric projections will be achieved through a self-funded business plan, requiring a reduction of Orsted’s investment programme, execution of construction projects and, delivery of its divestment programme. The business plan is financed through a combination of operating cash flow, partnerships and divestments, tax equity, and debt and hybrid issuances, without any need for raising new equity, he said.

The company will continue its efficiency programme to further drive cost efficiency beyond the $140 million savings plan implemented during 2024. As they do not expect to construct at the same pace as current build-out programme, Orsted will also be rightsizing its cost base and organisation continuously.

“These adjustments will not affect the execution of the 9 GW of renewable projects that Orsted is currently constructing. The construction portfolio brings line of sight to an expansion of renewable capacity from 18 GW to more than 27 GW,” he explained.

With the adjustments to its business plan, Orsted plans investment programme between $29.25 billion and $32.04 billion in the period 2024-2030. The company expects EBITDA (excluding new partnerships and cancellation fees) to increase to approximately between $4.04 billion and $4.6 billion in 2026.

Orsted also expects a return on capital employed (ROCE) of approximately 13 % on average in the period 2024-2030.