Summary
- US ruling offers temporary relieve for Orsted
- Risk of credit downgrade reduced, analyst say
- Project was 80% complete at time of work-stop order
- Orsted incurs weekly cost of $15.7 million for project
COPENHAGEN, Sept 23 (Reuters) – Orsted shares rose on Tuesday after a U.S. federal judge ruled it could resume work on an almost completed offshore wind project in the United States, delivering a win for an industry under sustained attack from President Donald Trump.
But the victory may prove short-lived, as analysts warn the White House could appeal the decision or take further regulatory action against other projects as part of the administration’s broader campaign to dismantle the renewable energy sector.
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Orsted has been losing $2 million a day since the U.S. Bureau of Ocean Energy Management issued its work-stop order for its Revolution Wind project on August 22.
“While the judge’s injunction should provide near-term relief to Orsted shares, this does not protect Revolution from the outcome of the ongoing legal case, nor possible further actions,” Citi said in a note to clients on Tuesday.
RISK OF CREDIT DOWNGRADE REDUCED
Attorneys for the Trump administration had argued that the project failed to comply with the conditions of its permit related to conflicts with national security and scientific ocean surveys. Revolution Wind disputed those claims.
Monday’s legal ruling, which is temporary, blocks the enforcement of the stop-work order while the case remains under review.
The Danish company, already grappling with inflation, higher interest rates, and supply chain delays, is in the process of completing a $9.4 billion capital injection from shareholders to stave off a potential credit rating downgrade.
The ruling reduces the immediate risk of a downgrade, according to brokerage Sydbank, though they cautioned of “high political risk in the U.S. market.”
Orsted shares were up 6.45% at 118 Danish crowns by 0926 GMT, after rising as much as 12% at market open.
WORK TO RESUME AS SOON AS POSSIBLE
The Revolution Wind project, located 15 miles (24.14 km) off the coast of Rhode Island, was 80% complete with all offshore foundations in place and 45 of 65 wind turbines installed when Orsted received the work-stop order.
Orsted said it would resume work “as soon as possible”, but declined to elaborate further.
The Danish company and joint venture partner Skyborn Renewables have already spent or committed about $5 billion to the project, according to U.S. court filings by the companies. They would incur over $1 billion in breakaway costs if it were to be cancelled.
Orsted CEO Rasmus Errboe has warned that costs could rise significantly by October if specialised vessels contracted to install the remaining substation and cables are no longer available within their contracted period and Orsted is forced to re-enter the market at potentially much higher rates.
($1 = 6.3333 Danish crowns)
Reporting by Louise Rasmussen and Stine Jacobsen Editing by Jacob Gronholt-Pedersen, David Goodman and Joe Bavier
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