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Ørsted remains stable through COVID-19

By: Tom Russell 12/08/2020 Ørsted

General Windfarms

Offshore wind giant Ørsted has issued its interim report for the first half-year (H1) of 2020. The company recorded an operating profit (EBITDA) of DKK 9.8 billion, an 11% increase compared to the same period last year.

Earnings from offshore and onshore wind farms in operation increased by 17% to DKK 8.2 billion in H1, which was attributed to the ramp-up of power generation from Hornsea 1, Lockett, and Sage Draw together with high wind speeds. Net profit amounted to DKK 2.5 billion and return on capital employed (ROCE) came in at 11%.

In Q2 2020, operating profit (EBITDA) totalled DKK 3.0 billion compared with DKK 3.6 billion in 2019. The decrease of DKK 0.7 billion was attributed to high construction activity at Hornsea 1 in Q2 2019. EBITDA excluding construction agreements increased with DKK 0.6 billion (29%).

Henrik Poulsen, CEO and President of Ørsted, said: “Despite the comprehensive health, social, and economic consequences of COVID-19, Ørsted has maintained stable operations and strong earnings during 2020. Our asset base has continued to be fully operational and we have maintained normal availability rates on our offshore and onshore wind farms.

"We have however seen negative COVID-19 related effects on European power markets, especially in the UK, driven by lower demand for electricity. The negative impact on our Q2 earnings was approx. DKK 150 million. A contained impact which does not change our full-year expectations.

"Our construction projects have largely progressed according to plans, both in Europe, Asia, and the US. The part of our portfolio most affected by COVID-19 is the construction of offshore substations for Hornsea 2 and Greater Changhua 1 & 2a. These are being constructed at two shipyards in Singapore, which were closed down for two months due to COVID-19. The shipyards have now begun to slowly ramp-up again. Although we still expect to be able to complete both projects within our budget and time schedule, we see increased risk of delays; especially at Hornsea 2. We expect any delays to have a limited overall impact on project economics.

"During the second quarter we achieved significant strategic results.

"We signed the largest ever renewable corporate power purchase agreement (CPPA) with Taiwan-based TSMC, the world’s largest semiconductor foundry. TSMC will offtake the full generation from our 920MW Greater Changhua 2b & 4 offshore wind farm.

"In the US, the Bureau of Ocean Energy Management (BOEM) released a draft of their Supplemental Environmental Impact Statement (SEIS) in June. The SEIS provides an evaluation of the foreseeable cumulative impacts of offshore wind projects on the US East Coast and provides a framework for future development of the industry. We are still awaiting the timeline for the approval process for our US projects. We expect to have more clarity during the second half of the year.

At the 12MW Coastal Virginia demonstration project in the US, which we are constructing for Dominion Energy, we successfully installed both monopile foundations and turbines in June. The wind farm is the first ever in US federal waters."

Ørsted EBITDA guidance is unchanged, with DKK 16-17 billion expected in 2020. The company has lowered its expectation for gross investments by DKK 2 billion, to DKK 28-30 billion in 2020, due to changed timing of payments.

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Ørsted remains stable through COVID-19

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