Ørsted faces market turmoil after $9 Billion fundraising plan
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Ørsted’s shares plunged to a record low after the world’s largest offshore wind developer announced plans for a $9 billion rights issue. The Danish group is seeking to stabilise its balance sheet following heavy losses on its US projects, blaming an “extraordinary situation” in the wind industry and policy headwinds from the Trump administration. The share price fell nearly one third in a single day, erasing about two thirds of its market value since the start of the year.
Capital raise targets US project losses
The capital raise, equivalent to 60 billion Danish kroner, will be one of the largest in European renewable energy history. Ørsted’s leadership, now headed by Rasmus Errboe after the departure of Mads Nipper earlier this year, is framing the move as essential to keep its flagship Sunrise Wind project on track. The project, located off the coast of New York, has been plagued by rising financing costs, delays in regulatory approvals and supply chain constraints.
Investor confidence hit by political risk
Investor confidence has been shaken by the combination of rising interest rates, global inflation and political uncertainty in the US market. Former President Donald Trump’s administration rolled back federal support for offshore wind and signalled opposition to large scale developments along the Atlantic coast. That shift undermined financial modelling for projects that were already operating on tight margins. Ørsted has said the policy reversal alone has added billions in unforeseen costs to its US portfolio.
Industry challenges extend beyond US politics
The group’s troubles extend beyond politics. The offshore wind sector has been grappling with shortages in specialised vessels and components, with manufacturers struggling to keep up with demand. These bottlenecks have driven up project costs and extended construction timelines, eroding returns and making it harder for developers to secure favourable financing terms. In 2023 Ørsted cancelled two major New Jersey projects, Ocean Wind 1 and 2, and booked impairments of nearly 28 billion kroner.
Analysts question the scale of the solution
Financial analysts say the latest rights issue is unlikely to fully resolve Ørsted’s problems. While the injection of fresh equity will help stabilise leverage ratios and reassure lenders, it also dilutes existing shareholders at a time when the stock is already under pressure. The company has been selling minority stakes in operational wind farms in the UK to raise cash, but those transactions have not been enough to offset the scale of US project write downs.
Long term prospects remain under scrutiny
For the wider offshore wind industry, Ørsted’s difficulties are a warning sign that the green transition is vulnerable to shifting political priorities and macroeconomic conditions. Developers in Europe and Asia have been watching the US market closely, hoping to capitalise on federal incentives offered under the Biden administration. If those incentives are withdrawn or weakened, projects may be delayed or cancelled, slowing progress toward global renewable energy targets.
Ørsted maintains that its long-term growth prospects remain intact, pointing to a development pipeline that stretches across multiple continents. The company continues to invest in European and Asian projects where policy support is more stable. However, its reliance on the US as a growth market means political risk will remain a defining factor for investors assessing its future value.
Ørsted will focus on completing its existing projects while reassessing future investments in the US market.
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