Reversal Of Fortune
Ørsted to Resume Revolution Offshore Wind Project
In a major turn of events, Danish wind giant, Ørsted, is resuming its Revolution Wind project off the coast of Rhode Island.
The US District Court for the District of Columbia granted the preliminary injunction sought by Revolution Wind regarding the government’s stop-work order, allowing Revolution Wind LLC to restart impacted activities while the underlying lawsuit challenging the stop-work order progresses. Revolution Wind will continue to seek to work collaboratively with the US Administration and other stakeholders toward a prompt resolution.
Ørsted said that Revolution Wind will resume impacted construction work as soon as possible, with safety as the top priority. Ørsted’s subsidiary Revolution Wind, a 50/50 joint venture with Global Infrastructure Partner’s Skyborn Renewables, is constructing the Revolution Wind offshore wind project.
Ørsted has been under immense pressure as financial and regulatory pressures clash. Ørsted had been canceling or delaying projects to shore up its balance sheet. Despite the headwinds, the company remained a key driver of US offshore wind development.
In August, the US Bureau of Ocean Energy Management issued a stop-work order for the Revolution Wind project. The project was already 80% complete, with 45 out of 65 wind turbines installed, leaving Ørsted with yet another potentially catastrophic write down. Ørsted and the states of Rhode Island and Connecticut then sued the Trump administration, deeming the decision to block Revolution Wind was illegal.
Seemingly overnight, the Revolution Wind project went from a potential cash cow to a money pit. Ørsted was left with few options but to raise cash. It deployed a US$9.4 billion rights issue worth about half of the company’s value. A rights issue is basically an opportunity for existing shareholders to buy new shares at a discounted price.
On September 1, Norwegian energy giant, Equinor, announced that it would support Ørsted with US$939 million in new capital. The news follows Equinor’s October announcement to buy a 9.8% stake in Ørsted. Equinor had been a leader in offshore wind but has pulled back on many projects in favor or investing in its core offshore oil and gas projects and carbon capture and storage.
