Ørsted, a global renewable energy leader, has reported a $1.7 billion impairment for Q4 2024. This impairment stems from challenges within its US offshore wind projects. Specifically, project hurdles and rising costs impacted financial results.

Despite this significant financial adjustment, Ørsted maintains a positive long-term outlook. The company remains committed to the US renewable energy market. SuperMetalPrice notes that the impairment reflects industry-wide pressures. These pressures include supply chain disruptions. Also, increased component costs contribute.

Ørsted’s commitment to the US market remains steadfast. The company believes in the long-term potential of offshore wind. Furthermore, they plan to navigate current challenges. Consequently, they aim to deliver sustainable energy solutions.

The impairment does not alter Ørsted’s strategic focus. They continue to invest in renewable energy projects. This ensures a transition to cleaner energy sources.

Impairment and Project Delays: The Impact of Rising Costs and Interest Rates

Ørsted’s preliminary EBITDA for 2024 is projected at DKK24.8bn ($3.46bn), aligning with previous forecasts. However, the company experienced a substantial impairment of DKK12.1bn ($1.7bn) in Q4 2024. The impairment is attributed to several factors:

• Rising Interest Rates: A 75-basis-point increase in US long-term interest rates raised the weighted average cost of capital, which negatively impacted the valuation of Ørsted’s offshore wind projects in the US.
• Seabed Lease Revaluations: Reassessments of seabed leases off the coasts of New Jersey, Maryland, and Delaware led to a DKK3.5bn impairment due to market uncertainties.
• Sunrise Wind Project Challenges: The Sunrise Wind project, which is experiencing supply chain disruptions and construction complexities, faced increased costs and delays. The revised schedule for commissioning has been pushed to the second half of 2027, which also contributed to the impairment.

Despite these challenges, Ørsted remains optimistic about its long-term presence in the US offshore wind market, citing its potential to drive renewable energy growth and job creation.