European power firms, together with Denmark’s Orsted, will probably write down extra of their U.S. offshore wind investments this week after BP and Equinor booked $840 million in impairments in current days.
Orsted, the world’s largest offshore wind developer, stated in August it might see impairments of 16 billion Danish crowns ($2.3 billion) on its U.S. offshore developments because of provide chain issues, hovering rates of interest and an absence of recent tax credit.
Orsted, which was not instantly out there for remark, will publish its third quarter earnings on Wednesday.
Hovering prices from rising inflation, rate of interest hikes and provide chain delays have solid doubt on plans by U.S. President Joe Biden and several other states to make use of offshore wind to interchange fossil fuels in power manufacturing and cut back carbon emissions.
Analysts stated Orsted has already warned it would write down not less than 5 billion Danish crowns and famous that these impairments may attain as a lot as 16 billion Danish crowns if rates of interest within the U.S. are above a sure degree.
“You may say it seems to be fairly sure that they (Orsted) will not have the ability to follow the 5 billion” Danish crowns in impairments, Jacob Pedersen, senior analyst at Sydbank, a Danish financial institution, advised Reuters.
On Tuesday, power main BP wrote down $540 million within the third quarter on wind initiatives after officers in New York state rejected a request for higher phrases to replicate what BP known as “inflationary pressures and allowing delays.”
Norway’s EquinorEQNR.OL, BP’s accomplice on these New York offshore wind developments, booked a $300 million impairment on the initiatives on Friday.
BP paid Equinor $1.1 billion in 2020 for a 50% stake within the enterprise to develop the Empire and Beacon wind initiatives off New York, which have a mixed capability of three,300 megawatts (MW), able to powering about 2 million properties.
Analysts stated BP, Equinor and Orsted will probably cancel some contracts to promote energy in New York, like different offshore wind builders have already achieved in Massachusetts and Connecticut.
Orsted has a contract to promote energy in New York from its 924-MW Dawn Wind venture off Rhode Island and Massachusetts.
In Massachusetts, two offshore wind builders, SouthCoast Wind and Commonwealth Wind, agreed to pay native utilities to terminate offers that will have delivered round 2,400 MW of power.
SouthCoast is owned by items of Shell, which is able to report earnings on Thursday, and Ocean Winds.
Ocean Winds is owned by items of Portuguese power firm EDP Energias de Portugal majority-owned EDP Renováveis and France’s ENGIE.
Commonwealth is a unit of Avangrid, which is majority owned by Spanish power firm Iberdrola.
Avangrid additionally canceled a contract to promote energy in Connecticut from its proposed 804-MW Park Metropolis offshore wind farm.
(Reuters – Reporting by Scott DiSavino, Louise Breusch Rasmussen and Ron Bousso; enhancing by Jonathan Oatis)
