Rasmus Errboe, the newly appointed chief executive of the Danish offshore wind developer Orsted, recently announced a 25 percent reduction in the company's investment plans, indicating challenges inherited from previous management.
Over the past two years, Orsted has curtailed its ambitions for several large wind projects off the East Coast of the United States, particularly in New Jersey, due to factors such as project delays, inflation, and rising interest rates.
The situation has been further complicated by political opposition to offshore wind farms, particularly from former President Trump, which poses risks to Orsted's ongoing projects off New York and Rhode Island.
Errboe stated, “We are working relentlessly to minimize the risks given the market conditions and the economic climate,” while acknowledging the absence of guarantees regarding project outcomes.
This strategic shift at Orsted, a prominent player in renewable energy in Europe, coincided with Equinor's announcement of a similar reduction in planned expenditure on low-emission projects, from $10 billion to $5 billion over the next three years, due to a slower-than-expected energy transition.
Anders Opedal, Equinor's chief executive, noted the company's focus on other energy options after reporting a loss in their renewable energy sector.
Despite challenges, large European energy companies are not completely abandoning investments in wind and solar technologies, but rather reassessing their strategies in light of recent pressures.
Orsted's heavy investment in the U.S. offshore wind market has led to financial difficulties, culminating in a loss of approximately 6 billion Danish krone reported for the fourth quarter of 2024.
In light of significant stock price declines, which have decreased by over 50 percent over three years, Orsted's board appointed Errboe, the previous deputy, to replace outgoing CEO Mads Nipper.
Orsted’s financial struggles have attracted interest from potential investors aiming to acquire its renewables portfolio at lower prices.
Equinor’s CFO, Torgrim Reitan, highlighted the cyclical nature of energy markets, suggesting that current challenges present opportunities for improvement among offshore wind operators.
Acting on this perspective, Equinor took a 10 percent stake in Orsted in October, though Orsted's stock has faced sharp declines since then.
Wind industry executives have noted that while certain challenges, such as inflation, are easing, the political climate under the Trump administration has increased caution regarding U.S. projects.
Henrik Andersen, CEO of Vestas, a leading wind turbine manufacturer, expressed concern that offshore projects have effectively halted but remained optimistic about continued sales of onshore turbines, which represent a larger segment of Vestas's business.
Vestas reported a significant profit for the first time since 2017, indicating potential recovery driven by its land-based turbine operations.