Copenhagen (AFP) – Denmark’s struggling offshore wind power group Orsted said Friday it was replacing its CEO with his deputy as the sector faces an “increasingly challenging situation.” Orsted said Mads Nipper would step down as chief executive on Saturday after four years on the job, with the board appointing 13-year company veteran Rasmus Errboe, the deputy CEO and chief commercial officer, to replace him.
Long dependent on fossil fuels before emerging as a champion of offshore wind power, Orsted has seen its share price fall 80 percent since January 2021. The return of Donald Trump to the White House could prove another challenge as the US president temporarily froze federal permitting and loans for all offshore and onshore wind projects.
“The renewable energy market has fundamentally changed since January 2021,” chairwoman Lene Skole said in a statement. “The impacts on our business of the increasingly challenging situation in the offshore wind industry, ranging from supply chain bottlenecks, interest rate increases, to a changing regulatory landscape, mean that our focus has shifted,” Skole said. “Therefore, the board has today agreed with Mads Nipper that it’s the right time for him to step down and the board has appointed Rasmus Errboe to take over as CEO.”
The company was dealt a $4 billion blow in 2023 when it cancelled wind farm projects in the United States, a crucial market for the group. It booked writedowns totalling 12.1 billion Danish kroner ($1.7 billion) in the last quarter of 2024 due to interest rate hikes, a decrease in the value of seabed leases off the US east coast, and the delay of the Sunrise Wind project off New York state. “I’m looking forward to taking the lead on the transformation necessary to navigate the headwinds that Orsted and our industry currently face,” Errboe said.
Orsted’s falling share price “reflects a lack of confidence among investors that Orsted can turn this around,” said Jacob Pedersen, analyst at Danish financial firm Sydbank. “When things go wrong in the magnitude of what has been happening with Orsted, it’s like football, you need to sack the coach,” Pedersen said.
Orsted is one of the few major oil and gas companies to have radically transformed itself into a renewable energy specialist. Between 2010 to 2024, it shifted from a fossil fuel-based business to one in which renewable energy accounts for 97 percent of its business. It was the first company to make significant investments in US offshore wind, securing fixed-price contracts in a low-interest environment. But they have since become unprofitable due to the combined effects of rising costs and interest rates. The Sunrise Wind project, 30 miles off Montauk, New York state, has been delayed due to supply chain issues.
“For Orsted, Trump is bad news, but they still have a vast portfolio of European projects to execute,” Pedersen said. According to analysts, a ray of hope is Norwegian energy giant Equinor’s acquisition of nearly 10 percent of Orsted’s shares in October, making it the second-largest shareholder after the Danish state. The Danish state, which holds a 50.1 percent stake, announced on Friday that it might provide state aid to guarantee two to three gigawatts of offshore wind capacity, with a tender to be launched in spring 2026.
“The conditions for offshore wind have worsened in recent years,” climate minister Lars Aagaard said at a press conference.
© 2024 AFP
