REG-Ørsted A/S Ørsted announces anticipated impairments on its US portfolio, continues to progress projects

Oersted A/SAnnouncement

29/08/2023 22:15

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   Ørsted A/S (Orsted)
   Ørsted announces anticipated impairments on its US portfolio, continues to
   progress projects

   29-Aug-2023 / 23:08 CET/CEST

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   29.8.2023 23:07:54 CEST | Ørsted A/S | Inside information

   As part of the continued maturation and a pre-final investment decision
   (FID) review of its near-term US offshore development projects, Ørsted has
   assessed the aggregate adverse impacts relating to the supply chain, lack
   of favorable progress in Investment Tax Credit (ITC) guidance, and
   increased interest rates, which affect its US portfolio.

   The Ocean Wind 1, Sunrise Wind, and Revolution Wind projects are adversely
   impacted by a handful of supplier delays. Ørsted has concluded that there
   is a continuously increasing risk in these suppliers’ ability to deliver
   on their commitments and contracted schedules. This could create knock-on
   effects requiring future remobilizations to finish installation, as well
   as potentially delayed revenue, extra costs, and other business case
   implications. These impacts will lead to impairments of up to DKK 5
   billion, assuming no further adverse developments in the supply chains on
   these projects. 

   In addition, our continued discussions with senior federal stakeholders
   about additional ITC qualifications for Ocean Wind 1 and Sunrise Wind are
   not progressing as we previously expected. We continue to engage in
   discussions with federal stakeholders to qualify for additional tax
   credits beyond 30%. If these efforts prove unsuccessful, it could lead to
   impairments of up to DKK 6 billion. The level of a possible impairment
   will be decided based on a probability weighted assessment of the
   likelihood of obtaining the additional ITCs.

   Furthermore, the US long-dated interest rates have increased, which affect
   our US offshore projects and certain onshore projects. If the interest
   rates remain at the current level by the end of third quarter, it will
   cause impairments of approximately DKK 5 billion. 

   The impairments relating to Ocean Wind 1, Sunrise Wind, Revolution Wind,
   South Fork Wind, Block Island Wind Farm, and several US onshore projects
   will be recognised in our interim report for the first nine months of
   2023.

   While Ørsted’s near-term US offshore wind development portfolio does not
   meet our value creation target on a lifecycle basis, we remain convinced
   that the value-creation of the portfolio will be within 150 to 300 basis
   points spread-to-WACC on a forward-looking basis.

   Adjusted for the anticipated impairments, we maintain a ROCE target for
   the period 2023-2030 of approximately 14%.

   Ørsted continues to progress projects

   Ørsted will continue to progress the US near-term offshore wind projects
   including obtaining final federal and local permits, working with
   suppliers to mitigate delays and continuing our dialogue with stakeholders
   to try to qualify for at least 40% ITCs on all projects.

   We will work towards taking FID on Ocean Wind 1, Sunrise Wind, and
   Revolution Wind projects towards the end of 2023 or in early 2024. Pending
   FID, Ørsted now expects to commission Ocean Wind 1 in 2026.

   David Hardy, Executive Vice President and CEO of Region Americas at
   Ørsted, says: “The US offshore wind market remains attractive in the long
   term. We will continue to work with our stakeholders to explore all
   options to improve our near-term projects including continued dialogue
   about ITC qualification, OREC adjustments, and other business case
   levers.”

   The information provided in this announcement does not change Ørsted’s
   previous EBITDA guidance for the financial year of 2023 or the announced
   expected investment level for 2023.

   Call with management
   For analysts: Ørsted will host an analyst call tomorrow, Wednesday 30
   August, at 8:00-8:55 CEST with CEO Mads Nipper, CFO Daniel Lerup, and CEO
   of Region Americas David Hardy. See dial-in details below. 

   For media: CEO Mads Nipper, CFO Daniel Lerup, and CEO of Region Americas
   David Hardy will host a call for media tomorrow at 8:55-9:30 am CEST. See
   dial-in details below.

   Investor call 08:00-08:55 CEST
   Please  1 register via this link
   Operator assisted dial-in:
   Denmark: +45 89 87 50 45
   United States: +1 646 664 1960
   United Kingdom: +44 20 3936 2999
   For global dial-in numbers  2 please click here
   Access code: 982431

   Media call 09:00-09:45 CEST 
   Please  3 register via this link
   Operator assisted dial-In:
   Denmark: +45 89 87 50 45
   United States: +1 646 664 1960
   United Kingdom: +44 20 3936 2999
   For global dial-in numbers  4 please click here
   Access Code: 253003

   For further information, please contact:

   Media Relations
   Tom Christiansen
   +45 99 55 60 17
    5 tomlc@orsted.com

   Investor Relations
   Rasmus Keglberg Hærvig
   +45 99 55 90 95
    6 ir@orsted.com 

       Attachments

     •  7 CA OCW1.pdf

   News Source: Ritzau

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   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   ISIN:          DK0060094928
   Category Code: MSCH
   TIDM:          Orsted
   Sequence No.:  267911
   EQS News ID:   1714347


    
   End of Announcement EQS News Service

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