4C Offshore Empowering Intelligence

Ørsted remains stable despite tenacious COVID-19 pandemic

4C Offshore | Tom Russell
By: Tom Russell 28/10/2020 Ørsted
Ørsted’s Board of Directors has issued its interim report for the first nine months of 2020. The offshore wind giant recorded an operating profit (EBITDA) of DKK 13.1 billion, a 2% increase compared to the same period last year.

Earnings from offshore and onshore wind farms in operation increased by 16% to DKK 11.6 billion driven by the ramp-up of power generation from
Hornsea 1, Borssele 1&2, Lockett, Sage Draw, and Plum Creek.

Net profit amounted to DKK 14.6 billion and Return on capital employed (ROCE) came in at 9%.

Revenue decreased by 35% to DKK 6.4 billion in Ørsted’s Offshore segment. Power generation increased by 14% relative to Q3 2019, primarily due to ramp-up of generation from Hornsea 1 and Borssele 1 & 2. Furthermore, Ørsted reported higher availability, mainly due to a cable remediation campaign at London Array and converter station outages at Borkum Riffgrund 2 in Q3 2019. This was partly offset by continued adverse COVID-19 impacts on especially the UK power market due to a lower demand for electricity. This led to hours with negative prices in July, lower expected ROC recycle prices, and higher balancing tariffs (BSUoS) from National Grid in Q3 2020.

Revenue from offshore wind farms in operation increased by 15% to DKK 4.2 billion driven by higher power generation. Revenue from power sales decreased by DKK 0.2 billion due to lower power prices. Revenue from construction agreements decreased by DKK 4.0 billion due to high activity in Q3 2019 related to the construction of the offshore wind farm Hornsea 1 for partners. In Q3 2020, revenue from construction agreements primarily related to the construction of Coastal Virginia Offshore Wind.

EBITDA decreased DKK 0.6 billion relative to Q3 2019 amounting to DKK 2.6 billion. EBITDA from Sites, O&M, and PPAs amounted to DKK 3.0 billion in Q3 2020. The 15% increase was due to the ramp-up of Hornsea 1 and Borssele 1 & 2.

EBITDA from partnerships decreased by DKK 0.9 billion amounting to DKK 0.2 billion. In Q3 2020, earnings from construction agreements were primarily related to the construction of Coastal Virginia Offshore Wind and minor updates regarding finalised construction projects. In Q3 2019, earnings from construction agreements primarily concerned Hornsea 1. EBITDA from other activities, including project development, amounted to DKK -0.6 billion and was in line with Q3 2019. Depreciation increased by 27% and amounted to DKK 1.5 billion. The increase was mainly due to more wind farms in operation.

Cash flow from operating activities amounted to DKK 0.1 billion, which was DKK 0.4 billion higher than in Q3 2019. The increase was mainly due to high construction activity at Hornsea 1 in Q3 2019, partly offset by an increase in trade receivables related to our trading and power portfolio optimisation activities and lower EBITDA. In Q3 2020, we had a net cash outflow from work in progress of DKK 0.1 billion, mainly from the construction of Coastal Virginia Offshore Wind and construction of the offshore transmission asset at Hornsea 2. Gross investments amounted to DKK 6.6 billion and mainly related to
Borssele 1&2, Hornsea 2, Greater Changhua 1 & 2a , and Ocean Wind.

Henrik Poulsen, CEO and President of Ørsted, said: “Despite the tenacious COVID-19 pandemic, our operations and financial performance in Q3 remain stable and fully in line with our expectations from the beginning of the year.

"The construction of offshore wind, onshore wind, and solar PV assets across the globe is progressing satisfactorily, despite the challenges caused by the COVID-19 pandemic. In Q3, we commissioned our onshore wind farm Willow Creek in Nebraska, US, and installed the last wind turbine at our offshore wind farm Borssele 1 & 2 in the Netherlands."


Ørsted’s most affected construction project in its portfolio remains Hornsea 2, due to delays in the offshore topside construction at a shipyard in Singapore which was closed down due to COVID-19. The shipyard is now up and running again, and it does not expect the delay to affect the commissioning date of the wind farm.

In October, Ørsted submitted bids in the up to 2.5 GW auction in New York. The outcome of the auction is expected before year end.

The company's pipeline of US offshore development projects is also facing delays. It is still waiting for BOEM to decide on the preferred wind farm layout for the build-out of offshore wind on the US East Coast. Furthermore, it is still waiting for clarity concerning the federal permitting process for its projects. The company had expected to receive the ‘Notice of Intent’ (NOI) from BOEM for its advanced-stage development projects at this point in time, but now foresee clarity on the permitting timelines being pushed to late 2020 or even into 2021, which constitutes a significant delay.

Even assuming the permitting process starts moving within the first quarter next year, it appears highly likely that Revolution Wind, Ocean Wind, Skipjack and Sunrise Wind will be delayed beyond the previously expected 2023 and 2024 construction years.

Until there is a clear timeline from BOEM, Ørsted stated it cannot re-baseline its construction schedules. With regards to South Fork they company remains comfortable about its previously communicated timeline with COD in late 2023.


To remind, Ørsted recently appointed Mads Nipper CEO and Group President. Mads Nipper will take office on 1 January 2021. Henrik Poulsen will remain in office until 31 December 2020. To support a smooth transition, Henrik Poulsen will serve as special advisor to Mads Nipper until 31 January 2021.


For more information on offshore wind farms worldwide, click here.

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