Billions of Dollars in Wind Farm Impairments Force Green Energy Firms to Appeal for Greater Government Aid

Danish wind power developer Ørsted disclosed impairments related to two planned US offshore projects that will total $4.0 billion, significantly greater than the $2.3 billion in impairments the company anticipated in August. That sum could rise even higher, with Ørsted provisioning an additional $1.5 billion for further write-downs in the future. The cancellation of these two wind farms, which would have been the first established off the coast of New Jersey, follow several other abandonments of projects along the east coast. 

BP and Equinor’s New York-based wind projects are also at risk, following a set impairments impacting each company, totaling $840 million between them. New York has thus far refused to adjust previously-signed power purchase agreements (PPAs) to account for emergent macroeconomic hurdles that now threaten the profitability of the joint venture’s wind initiatives in the region. Siemens’ wind turbine business is seeking government assistance in Germany to support its wind power order book.

Related ETFs: First Trust Global Wind Energy ETF (FAN), iShares Global Clean Energy ETF (ICLN)

Ørsted, the world’s largest offshore wind-farm developer, announced the cancellation of two major US projects that would have provided the state of New Jersey with its first offshore wind farms in a write-down that will cost the company $4.0 billion throughout the first three quarters of 2023. The firm had previously disclosed in August that it may need to take impairments of up to $2.3 billion on its US projects, but the situation worsened and costs facing Ørsted have only ballooned since then.

Ocean Wind 1, which would have been New Jersey’s first offshore wind farm, generating enough electricity to power half a million homes, was one of the projects canceled by Ørsted. MRP noted back in September that this project was particularly problematic for the wind developer, previously being delayed to 2026. New Jersey resident groups Defend Brigantine Beach and Protect our Coast NJ recently brought suit against Ørsted and the state over a proposed tax break the company received to build a major offshore wind farm in the Atlantic. Ocean Wind 2 was the other New Jersey-based project that has been cancelled, previously slated to begin operations in 2028.

In addition to the current write-downs, Ørsted has also set aside an additional provision of up to $1.55 billion for “potential contract cancellation fees not already covered by the impairments,” meaning the total impairment could…