Ørsted has scrapped plans for a significant inexperienced fuels plant in Sweden, citing slower-than-expected progress within the rising marketplace for low carbon e-fuels in Europe.
Posting its newest monetary outcomes yesterday, the corporate stated it had racked up 3.2 billion Danish Krone (£370m) in impairment losses over the primary half of this yr, pushed largely by choices to cancel its Flagship One e-methanol manufacturing mission in Sweden and ongoing delays to its Revolution Wind offshore wind scheme on the East Coast of the US.
The choice comes simply two years after the corporate introduced it had made a remaining funding choice in Flagship One, which aimed to make use of captured biogenic CO2 and renewable hydrogen to supply 55,000 tonnes of e-methanol for the delivery trade.
British firm Carbon Clear was contracted to offer the carbon seize providers for the scheme, which was to be located in northern Sweden.
Offshore wind builders worldwide have been grappling with inflationary pressures over the previous two years, pushed by provide chain disruptions and rising prices within the wake of the power disaster.
Ørsted, which final yr cancelled two excessive profile wind initiatives within the US, introduced a strategic evaluate of its enterprise in February, decreasing its funding and capability targets and pausing dividend funds.
Mads Nipper, Ørsted’s CEO, stated the corporate was now centered on “prioritising progress choices with the very best potential for worth creation”.
“The liquid e-fuel market in Europe is creating slower than anticipated, and now we have taken the strategic choice to de-prioritise our efforts throughout the market and stop the event of FlagshipONE,” he stated. “We are going to proceed our focus and growth efforts inside renewable hydrogen, which is important for decarbonising key industries in Europe and nearer to our core enterprise.”
The choice comes a number of months after fossil gasoline large Shell paused the development of a significant biofuels plant in Rotterdam that might have produced so-called sustainable aviation gasoline (SAF) designed to assist decarbonise flight.
Regardless of the cancellation of the e-fuels mission, nevertheless, Nipper stated he was “happy” with Ørsted’s half yr monetary outcomes total, which present the corporate’s working earnings rose to 14.1 billion Krone (£1bn) within the first half of this yr, up from 10.2 billion Krone (£735m) for a similar interval final yr.
“Ørsted’s operations are performing nicely, and notably the earnings from our offshore wind farms, and thus our core enterprise, have elevated,” he stated. “Due to this fact, we preserve our EBITDA steering for the total yr, and we enhance our earnings expectations for our offshore wind enterprise.”
Nevertheless, he described the choice to push the business operation date for Revolution Wind from 2025 to 2026 following development delays to an onshore substation as “disappointing”.
“Within the first half of the yr, now we have executed on the up to date marketing strategy that we introduced in February, and now we have put nearly 2GW of renewable power capability into operation, offering renewable power to greater than 1.5 million households throughout three continents,” Nipper stated. “It is a important contribution to Ørsted’s long-term renewable capability targets.
“Regardless of encouraging progress on our US offshore wind mission Revolution Wind, the development of the onshore substation for the mission has been delayed. Which means now we have pushed the business operation date from 2025 into 2026, which led to an impairment. That is, in fact, unsatisfactory, and we proceed our devoted efforts to de-risk our portfolio.”
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