Denmark’s renewable energy giant Ørsted has witnessed a dramatic fall from grace, with its market value plummeting roughly 70% since 2021. The company, once heralded as a pioneer in the transition from fossil fuels to green energy, now faces significant challenges that have called into question the sustainability of rapid renewable energy expansion.
The company’s troubles deepened when Norwegian state-owned oil and gas giant Equinor acquired a 10% stake in October, marking a symbolic shift in the power dynamics of Europe’s energy sector. This move by a fossil fuel-focused competitor highlighted the growing uncertainties surrounding the renewable energy transition.
Ørsted’s journey from fossil fuel driller to renewables champion over the past 15 years mirrors the broader evolution of the energy sector. Rising costs, project abandonment, and scaling back of hydrogen and green fuel initiatives have plagued the company. These challenges have emerged alongside the end of ultra-low borrowing costs and a cooling ESG investment climate.
The global renewable energy landscape remains positive, with 565 gigawatts of new capacity added last year. Offshore wind costs have decreased significantly, reaching $81 per megawatt hour compared to $137 in 2018. However, Donald Trump’s re-election has cast a shadow over the sector, with threats to eliminate key Biden-era green subsidies and withdraw from the Paris Agreement.
Mads Nipper, Ørsted’s chief executive, maintains optimism despite recent setbacks. The company has reduced its renewables target to 35-38GW by 2030, down from 50GW, and announced up to 800 job cuts. The firm is now focusing on asset sales, including a recent £1.75 billion stake sale to Brookfield, as part of its recovery strategy.
The broader implications for the energy transition are significant. While renewable energy growth continues, the pace falls short of global climate targets. The challenge of balancing economic viability with environmental imperatives remains central to the industry’s future, as companies like Ørsted navigate an increasingly complex landscape.
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