Orsted's Legal Victory Fuels Hope for Offshore Wind Sector

Orsted shares rose 6% after a U.S. court allowed it to resume work on the Revolution Wind project. The ruling eases concerns about significant financial losses amid prior suspensions due to national security. This decision sparks optimism for Orsted’s Sunrise Wind project and impacts other developers.

Orsted shares surged by 6% on Tuesday following a pivotal U.S. court ruling that allows the Danish offshore wind company to recommence its near-complete Revolution Wind project. This decision alleviates fears of multibillion-dollar losses that loomed over the project due to previous suspensions under former U.S. President Donald Trump, who has been critical of wind turbines.

Revolution Wind, equipped with Siemens Gamesa turbines, is set to supply 704 megawatts of electricity to Rhode Island and Connecticut. Orsted CEO Rasmus Errboe emphasized the company's commitment to swiftly and safely resume construction, aiming to provide reliable and affordable energy to 350,000 homes. The ruling also positively impacts Orsted's Sunrise Wind project and Equinor's Empire Wind near New York, with both companies closely monitoring further legal outcomes.

Despite overcoming this legal hurdle, Orsted faces ongoing challenges, including inflation, higher interest rates, and supply chain delays. Recent downgrades by S&P Global and Moody's underscore the credit risks and political challenges posed by opposition in the U.S. to offshore wind projects. A further downgrade could increase borrowing costs and impact earnings substantially.

(With inputs from agencies.)