Orsted, a global leader in renewable energy, has announced a comprehensive business plan aimed at positioning the company for substantial growth and value creation in the coming years.
The cornerstone of Orsted’s new strategy is an ambitious target of achieving 35-38 GW of installed renewable capacity by 2030. Despite challenges, the company reaffirms its commitment to maintaining its position as a global leader in offshore wind while becoming a regional player in onshore and P2X in Europe and the US.
Central to Orsted’s revised approach is the prioritization of growth opportunities with the highest potential for value creation and lower risks. The company has undertaken a thorough reassessment of its portfolio and strategic choices, resulting in strategic adjustments such as ceasing the development of certain offshore wind projects, repositioning others, and exiting select offshore markets to focus on key growth areas.
Additionally, Orsted is implementing lessons learned from past projects, particularly in the US offshore sector, to enhance its operational model and mitigate risks in project development and execution. This includes measures such as robust contingency planning, supplier monitoring, and greater flexibility in project timelines.
As part of its restructuring efforts, Orsted aims to achieve significant cost savings and operational efficiency gains. The company plans to reduce its fixed costs by DKK 1 billion by 2026.
Orsted’s restructuring plan will include a reduction of 600-800 positions globally. Not all reductions will result in redundancies, but there will be redundancies throughout 2024. Today, Orsted is announcing that approx. 250 people globally will be made redundant and leave Orsted within the coming months.
Looking ahead, Orsted has updated its financial targets to align with its revised strategic ambitions. The company aims to achieve an unlevered, fully loaded lifecycle Internal Rate of Return (IRR) at 150-300 basis points spread to Weighted Average Cost of Capital (WACC), along with an Expected Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of approximately DKK 39-43 billion by 2030.
To fund its growth initiatives, Orsted plans to invest approximately DKK 270 billion between 2024 and 2030, with an initial investment of around DKK 130 billion by 2026.
Orsted has ceased the development of the offshore wind projects Ocean Wind 1 and Ocean Wind 2 in the form that they were awarded by the New Jersey Board of Public Utilities, has decided to reposition the offshore wind project Skipjack Wind in the US, and will primarily focus its US offshore portfolio towards the North-East Atlantic.
Orsted will be exiting several offshore markets (including Norway, Spain, and Portugal), deprioritising development activities in Japan, and planning for a leaner development within floating offshore wind and P2X.
Project cancellations and phasing of capital expenditure across the portfolio will result in approx. DKK 35 billion of capital expenditure relief in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023.
Orsted said its offshore strategy for the US will result in DKK 3 billion of development expenditure reductions in 2024-2026 compared to the numbers presented at the Capital Markets Day in June 2023.