Orsted AS Turbine share price crash. Source Google Finance, Fair Use, Low Resolution Image to Identify the Subject. Image modified and annotated.

Danish Wind Energy Giant Crashes 25% in One Day, Blames “Severe” US Market

Essay by Eric Worrall

h/t energywise – “… in talks with federal stakeholders to qualify for additional tax credits, which haven’t progressed as expected. …”

World’s Largest Offshore Wind Farm-Maker Crashes Most On Record After Catastrophic Results

THURSDAY, AUG 31, 2023 – 01:05 AM

Orsted A/S was hit with a massive 16 billion Danish kroner ($2.3 billion) impairment on its US portfolio due to snarled supply chains, soaring interest rates, and easy money tax credits drying up — a warning sign the green energy revolution bubble is in trouble. 

CEO Mads Nipper warned investors on a conference call: “The situation in US offshore wind is severe.” 

Bloomberg explained more about the headwinds plaguing Orsted: 

The company’s Ocean Wind 1, Sunrise Wind, and Revolution Wind projects in the US are being hurt by supplier delays, which could lead to writedowns of up to 5 billion kroner, it said late Tuesday. High interest rates could also add another 5 billion. In addition, the developer is still in talks with federal stakeholders to qualify for additional tax credits, which haven’t progressed as expected. If unsuccessful, it could lead to impairments of as much as 6 billion kroner.

Analysts at Bernstein warned clients in a note: “Today’s announcement flags risks in the US portfolio and does not do anything to improve the downbeat investor sentiment on the stock.” 

Read more: https://www.zerohedge.com/markets/worlds-largest-offshore-wind-farm-maker-crashes-most-record-after-catastrophic-results

One interesting aspect of this situation, is it highlights how vulnerable the renewables industry is to changes in the political landscape, even when they haven’t happened yet.

WUWT focusses a lot on the Biden administration’s apparent reluctance to conduct oil lease sales, allegedly hostile EPA oversight, and other apparent attacks on the fossil fuel industry. But equally, renewable investors and operators are suffering night terrors over the possibility a future conservative president might completely cancel their subsidy life support, at least at a federal level.

Let us hope the green industry’s worst fears are realised.

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September 1, 2023 10:06 pm

Bad, but would look less bad with a zeroed vertical axis.

Maybe next week ! 😉

Reply to  bnice2000
September 2, 2023 4:40 pm

so would “global warming”
those tenths of a degree would be difficult to see

Mike McMillan
September 1, 2023 10:18 pm

A win for the whales.

Joe Gordon
September 2, 2023 1:13 am

It’s not healthy for a business to rely so heavily on krona capitalism.

Reply to  Joe Gordon
September 2, 2023 4:09 am

Hawaiian Electric Industries says, “Hold my Bud Light.”

September 2, 2023 1:31 am

They were warned a long time ago that offshore wind is economically unviable:

From https://www.ref.org.uk/ref-blog/365-wind-power-economics-rhetoric-and-reality

“In stark terms a significant portion of wind output is expensive to produce and of no value in terms of its contribution to national wellbeing. Other than sheer ignorance there is no excuse for policymakers tolerating, let along promoting, this outcome.
I will conclude with some general lessons from the study:
1. Stop pretending! The projections of the costs of achieving Net Zero put out by government bodies and many others rely on cost estimates that are just wishful thinking. They have no basis in actual experience and a realistic appraisal of trends in costs. As a very broad brush calculation the cost of meeting the Net Zero target by 2050 is much more likely to be 10+% of annual GDP than the claimed 1-2% of GDP.
2. Accelerating arbitrary targets is very expensive. If the Government persists with the goal of building 30 GW of extra offshore wind capacity by 2030 the costs discussed here are likely to be significant under-estimates. This will be reinforced by the adoption of similar targets elsewhere in NW Europe. The offshore wind sector does not have the capacity to build new projects at a rate of 3 to 4 times the last decade. Any familiarity with the history of offshore oil & gas and other energy projects tells us that the consequence will be a gold rush. It is plausible to assume that capex and opex costs will rise by a minimum of 20% and probably closer to 50% above the already high costs that we observe in the audited accounts.
3. Bailouts of wind farms and financial institutions are inevitable. The Government is creating a situation in which it will have no option other than to bail out failed and failing projects simply to ensure continuity of electricity supply. There will be a game of pass the parcel over how the losses will be distributed but ultimately they will fall largely on taxpayers and energy customers. Any business investor outside the renewable energy sector should plan on the basis that electricity prices in 2030 will be 3-4 times in real terms what they are today.
4. Remember that not everyone has the same priorities. The UK and the EU are very minor bit players in what happens about climate change. The outcome will depend on choices made in China, the US and India. Focusing on China and India, they are only interested in options that are consistent with both economic growth and other environmental goals. Offshore wind is expensive and of limited interest in most of Asia.
5. As a rich country, the UK can afford Net Zero by 2050 at the aggregate level. However, it will mean allocating the proceeds of 10 or 15 years of economic growth to that single goal. Past experience shows that the UK’s political system cannot handle the structural and redistributive consequences of following that path. A strategy that acknowledges the real economic costs and difficulties of trying to make the transition too quickly is much more likely to be accepted and implemented.”

Even that analysis now appears hopelessly optimistic given it was based on data from before 2020!

general custer
Reply to  Baileytheecologist
September 2, 2023 8:06 am

The projections of the costs of achieving Net Zero put out by government bodies and many others….

Government doesn’t have the capability of projecting those costs. It’s the “many others” that come up with the bogus numbers. They are the leading research universities whose interest is in skimming the available funds for their own facilities, staff and projects. The failure of the effort to convert current energy supplies to non-fossil fuels will have only marginal effects on Harvard, Stanford, the University of Michigan and 66 other organized research schools. While these institutions enjoy incredible prestige, especially among their own faculty, staff, students, graduates and locality, except for perhaps being unable to stem the incredible rise in tuition, the reality is that they have become a quasi-agency of government, in fact public universities are a branch of government and many of their decisions are dictated by elected officials. Peer review is meaningless when all the peers sit in the same pews.

Perhaps there is no real answer to this very basic question, “what place do research universities actually occupy in society”? It’s time to look for answers.

September 2, 2023 1:45 am

Something is rotten in the state of Denmark (Australia/Canada/US/UK/Germany/etc).

Rod Evans
September 2, 2023 3:06 am

Oh dear, how sad, never mind. It ain’t arf hot mum.

September 2, 2023 3:38 am

But, but, we have the sacred words from the lips of our glorious leaders that wind energy is now the cheapest form of energy …
So why do they need subsidy’s !!

Tom Abbott
Reply to  1saveenergy
September 2, 2023 5:38 am

That’s what I want to know! Why can’t they just throw up a couple of thousand more windmills to solve their problem?

Oh! You say the wind doesn’t blow all the time? Never mind.

Reply to  Tom Abbott
September 2, 2023 7:02 am

Why can’t they use solar as backup??? OH!

Reply to  barryjo
September 2, 2023 7:52 am

Because solar gets used up during the day.

It’s much better to store night time solar in case the wind isn’t blowing.

Reply to  Redge
September 2, 2023 8:47 pm

Using solar only at night will definitely extend the life of the panels.

Tom Halla
September 2, 2023 3:48 am

Subsidy mining and rent seeking are unstable strategies. As wind and solar are not viable otherwise, it depends on government policy.

Reply to  Tom Halla
September 2, 2023 5:09 pm

“Subsidy mining and rent seeking are” the business strategies when you don’t have a strategy.

Tom Halla
Reply to  Streetcred
September 2, 2023 5:16 pm

It depends on one’s political pull, and cashing out by the next election cycle. I seem to remember people in Spain who forgot that, and got burned on solar.

Paul Stevens
September 2, 2023 3:56 am

“Let us hope the green industry’s worst fears are realised.”

If only.

David Wojick
Reply to  Paul Stevens
September 2, 2023 5:00 am

There is a good chance of that. The cost crisis is hitting hard.

Tom Abbott
Reply to  Paul Stevens
September 2, 2023 5:41 am

Their worst fears *will* be realized. The only question is how long it takes. And from the way it sounds, it won’t be long.

Reply to  Paul Stevens
September 2, 2023 6:03 am

The irony is that the blind dogma of pursuing wind is the main reason for the increase in costs for the manufacture and installation of wind turbines.
Fingers crossed that they go bust soon!

Dave Andrews
Reply to  Shytot
September 2, 2023 7:46 am

All five of Europe’s wind turbine manufacturers have been making huge losses for well over 2 years now. Wind Europe pointed out over 18 months ago that there was a looming worldwide shortage of the 3 kinds of vessels needed to construct offshore wind farms exacerbated by the growing size of the turbines that required larger ships and improvements to port facilites.

In Europe the industry is also being hit by being increasingly required to bid for contracts which costs have to be passed on to the supply chain and consumers.

Dave Andrews
Reply to  Dave Andrews
September 2, 2023 7:56 am

Sigh. In Europe the industry is also being hit by having to pay for the right to build the the wind farm in an ‘uncapped negative bidding’ process which costs have to be passed on to the supply chain and consumers.

Edit still not functioning 🙁

David Wojick
September 2, 2023 4:56 am

First I have heard of tax credits being negotiated with Feds. How does that work?

paul courtney
Reply to  David Wojick
September 2, 2023 5:50 am

Mr. Wojick: Not sure about UK, but it works in US by assuming green progs know what’s best for the planet and the little people, one party is taken over by them, and the other party decides that fighting for truth is too hard. After that, the “Feds” “negotiate” with themselves. We’ve seen it in “settled” lawsuits where lefty progs in the EPA negotiate with lefty progs who used to work at EPA. We lose.

Reply to  David Wojick
September 2, 2023 8:55 pm

Tax credits are subtracted directly from the taxes you owe, while tax deductions are subtracted from your calculated income.

Let’s say you made 50,000 last year and had a net tax rate of 10%. Meaning your taxes would be 5000.
A tax deduction of 1000 would reduce your income to 49,000, so your new tax owed would be 49000, a savings to you of 100.
A tax credit of 1000 would reduce your taxes owed from 5000, to 4000. A savings of 1000. Quite a bit more.

Even better is a refundable tax credit. With one of these, if the tax credit exceeds your taxes owed, then you end up getting a check for the difference. Quite a good scam if you can get it.

September 2, 2023 6:00 am

Funny how as soon as the “free” money dries up these shysters lose interest.
It’s clear that renewables may be classed as sustainable but the business most certainly isn’t.
Fingers crossed that they go bust soon.
The only new green jobs are for lawyers and debt collectors!

Reply to  Shytot
September 2, 2023 5:18 pm

Neither “renewables” or the “business” can be classed as sustainable. Intermittent and unreliable on both counts.

September 2, 2023 6:38 am

One interesting aspect of this situation, is it highlights how vulnerable the renewables industry is to changes in the political landscape, even when they haven’t happened yet.

This has always been the case, since about 1977.

September 2, 2023 8:43 am

… or it could be that a lot of whale bodies have washed up on the eastern seaboard, and the implied culprit is sonic surveys for off-shore wind.

September 2, 2023 10:37 am

Time is on our side but damage is being done. There’s no question fossil fuels will be used for at least the next couple of centuries but in the here and now the AGW narrative is doing its’ best to cripple Capitalism. The question is who/what country will be the first to admit defeat?

September 2, 2023 3:39 pm

Cancel all subsidies, tax credits and mandates. The renewable energy industry will be crushed under its own weight.

Reply to  Bob
September 2, 2023 5:22 pm

That will cause infinite wailing from the renewable rent seekers and I couldn’t stand that … allow them those “subsidies, tax credits and mandates” available only to the FF energy industry.

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