Orsted A/S dropped the development of two US wind projects, recording impairment charges significantly above its previous predictions in the latest blow to the struggling industry.
The Danish utility wrote down 28.4 billion kroner ($4 billion) in the third quarter, according to its earnings statement. That’s bigger than the warning of as much as 16 billion back in August. Despite the struggles in the sector, it kept its full-year guidance unchanged.
The update from the world’s biggest builder of offshore wind parks is the latest in a string of bad news from an industry vital to slow global warming. Surging costs and rising interest rates have led to project delays.
Orsted said it will stop the development of the Ocean Wind 1 and 2 projects due to additional supplier snarls. Orsted raised the alarm over the struggles of the offshore wind sector this summer when it first flagged potential impairments. Its shares have slumped almost 50% this year.
Read More: Orsted 3Q Ebitda Beats Ests; to Stop 2 Offshore Developments
Orsted is “extremely disappointed” about its exit, Chief Executive Officer Mads Nipper said in the statement. “However, the significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision.”
In the US, developers are rapidly backpedaling on their plans to develop offshore wind farms or asking to re-negotiate their deals due to a rampant rise in their cost of capital. Equinor ASA, BP Plc, Orsted and Eversource Energy were the most recent developers whose pleas to the New York state to let them raise their rates were rejected, leaving the developers at a loss for how best to move forward.
