Ørsted continues 'stable operations' despite COVID and cable issues

In: Windfarms
29/04/2021

Offshore wind giant Ørsted has issued its interim report for the first quarter of 2021 noting that it 'continued stable operations' despite the COVID-19 pandemic.

 

The company's operating profit (EBITDA) for the first quarter of the year amounted to DKK 4.9 billion, a DKK 1.9 billion decrease compared to the same period last year. It attributed the decrease to high earnings from the construction agreement related to the Hornsea 1 transmission assets in Q1 2020 not being repeated in Q1 2021, very strong wind speeds in Q1 2020 and the divested distribution, residential customer, and city light businesses last year.

Net profit amounted to DKK 1.6
billion and return on capital employed (ROCE) came in at 7.5 %.

Furthermore, Q1 2021 was impacted by a DKK 0.8 billion warranty provision related to cable protection system issues at some of its offshore wind farms. Ørsted discovered an array cable issue on several offshore wind farms across the UK and Continental Europe. The issue, which could concern up to 10 wind farms, occurs when the cable protection system (CPS) moves across the scour protection (i.e. rocks placed on the seabed around the foundations to avoid seabed erosion), abrading the CPS and in the worst-case scenario causing the cables to fail.

Ørsted also reiterated its current full-year gross investment expectation of DKK 32-34 billion. However, once the Brookfield Renewable Ireland acquisition closes, the purchase price will be added to the current guidance.

In its offshore business, revenue increased by 67 % to DKK 13.3 billion. Revenue from construction agreements increased by DKK 4.5 billion, primarily due to the divestment of the offshore transmission assets at Hornsea 1 in Q1 2021. Revenue from offshore wind farms in operation amounted to DKK 5.7 billion, in line with the same period last year due to the ramp-up from Borssele 1&2 which was offset by lower wind speeds.

EBITDA decreased by 30 % relative to Q1 2020 and amounted to DKK 3.9 billion.

Gross investments amounted to DKK 4.6 billion and was mainly related to
Greater Changhua 1 & 2a, Hornsea 2, and its US portfolio.

 

Mads Nipper, Group President and CEO of Ørsted, says in a comment to the interim report for the first quarter of 2021: “Ørsted’s operational performance was good during Q1 2021 and slightly exceeded our expectations, and we’ve reached multiple strategic milestones. In our Offshore business, the Polish Baltica 2 & 3 projects with a total capacity of up to 2.5 GW were awarded contracts for difference and we’ve entered a new partnership in the Baltic States. We also signed an agreement to farm down 50 % of Borssele 1 & 2. In our Onshore business, we’ve made a strategic acquisition in Ireland and the UK, which provides us with a platform for future growth in the European onshore renewables market. We’re looking forward to presenting an update of our strategy and long-term targets at our Capital Markets Day on 2 June.”



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