Ørsted urges Europe to act to avert wind energy ‘downward spiral’
Renewables pioneer says Trump’s tariffs will have ‘meaningful impact’ on its US projects
Ørsted, the world’s largest offshore wind power developer, has called on Europe to do more to support an industry at risk of a “downward spiral”, just as Donald Trump’s new tariffs heap further pressure on its ailing US operation.
Rasmus Errboe, chief executive of the Denmark-based industry pioneer, said European offshore wind was in a “tough place” due to rising costs, supply chain strains and uncertainty over electricity prices. He also said Trump’s new tariffs would have a “meaningful impact” on the cost of its projects in the US, where Ørsted has faced significant difficulties.
Errboe spoke to the Financial Times as Ørsted published a report calling for European capitals to commit to consistent annual support for the industry in order to meet offshore wind targets and help reverse rising costs.
“If you want to deliver on energy security, energy independence, affordability for Europe for the coming decades and meet the targets, then we need to make this change,” Errboe said.
The report noted that while the cost of producing electricity from offshore wind in northern Europe dropped 70 per cent in the five years to 2020, it had since surged by 50 per cent.
“Rising costs and a higher . . . cost of capital due to increased revenue risk are making project economics unsustainable,” the report said. “Swift and decisive action is needed to avoid the risk that the industry enters a downward spiral.”
Europe is banking on offshore wind to meet its ambitious net zero goals, given availability of coastline and limited space for onshore projects. However, the comments from Ørsted is a stark sign of the industry’s challenges.
Ørsted has endured a turbulent period after abandoning two US projects in 2023 due to rising costs and supply chain strains that triggered multibillion-dollar impairments. Its shares have more than halved over the past two years.
Errboe was promoted to chief executive this year as predecessor Mads Nipper was ousted, and the company has cut planned investment in the period to 2030 by a quarter.
Errboe said its two large offshore wind projects currently being built in the US, Revolution Wind and Sunrise Wind, would be hit by the new tariffs on aluminium and steel.
“It is in isolation [a] meaningful impact on our projects — no doubt about it,” he said, although he did not think it would jeopardise the projects.
He declined to rule out any further impairments in its US business, where it also develops onshore wind and solar power. The outlook for the renewables industry in the US has been clouded not only by tariffs but also Trump’s decision to halt some federal funding for the industry and the suspension of offshore wind development permits.
The EU, by contrast, is seeking to increase its offshore wind capacity to 60 gigawatts by 2030 and 300GW by 2050, from the current level of 37GW, while the UK wants to more than treble its capacity to 50GW by the end of the decade.
Ørsted wants European governments including the UK to commit to backing 10GW of offshore wind annually between 2031 and 2040 via contracts that guarantee developers a fixed price for electricity.
They say this would cut industry costs by almost a third over the next 15 years by removing the uncertainties that pushed up financing costs and hampered supply chains.
“Europe offshore wind has been a little bit of a test lab for different regulatory frameworks across European member states during the last four or five years,” Errboe said.
This should be replaced by “a more co-ordinated approach across Europe which would create the needed predictability and level of certainty for the entire industry”.