Developer Orsted drops plan to seek partners for Sunrise Wind project; stock drops

Danish energy giant Orsted has abandoned a strategy of seeking partners to share the cost of Sunrise Wind, the project being built off the New England coast to supply energy to more than 600,000 Long Islanders, in the latest setback for the U.S. offshore wind industry.

In a series of announcements and disclosures to investors on Monday, Orsted said it would instead initiate a stock offering to generate upward of $9.4 billion, enough capital to fund the Sunrise Wind project with $6.2 billion through its anticipated completion date of 2027 and to strengthen its financial position for other projects. Orsted in April announced it was taking a $1.7 billion impairment charge to reflect the declining value of Sunrise Wind.

Orsted said it has already begun installing turbine foundations off the coast of Rhode Island/Massachusetts for the Sunrise project, which promises to supply 924 megawatts of power to the Long Island electric grid.

News of Orsted's latest setback sent its share price into a tailspin Monday, with its stock losing nearly a third of its value to hit a record low, Reuters reported, the latest battering of its shares tied to U.S. market setbacks. (Orsted last year canceled two large U.S. projects off New Jersey in the face of the setbacks.)

The Sunrise project is separate from Empire Wind, the 54-turbine project being worked on by Norway-based Equinor some 14 miles from the coast of Jones Beach. That project, while facing a federal lawsuit by fishing, community and conservation groups, is expected to be complete by the next year’s end, when it will deliver its energy to the New York City grid. Equinor has a 9.8% ownership of Orsted.

On Friday, Nassau County Executive Bruce Blakeman’s office said it would file a brief with the federal district court in New Jersey, seeking to have construction of the project halted for environmental and other reasons. "We know that huge wind turbines are a danger to marine life, a national security threat and an expensive form of energy production," Blakeman said in an emailed statement.

Equinor, which expects to complete foundation installations later this year and install turbine towers next year, said it has a series of measures in place to protect marine life from harm during pile-driving of the foundations. A spokesman didn't immediately respond to a request for comment.

Bruce Afran, a lawyer for the plaintiffs in the case, said he expects to restart filings for a temporary restraining order to halt construction on the project after he said Equinor declined service of the suit for weeks. The suit claims President Donald Trump's administration properly halted construction for environmental reasons, and that Equinor, as an entity controlled by the Norwegian government, is excluded from holding lease rights to the offshore wind area.

Orsted’s financial challenges, which began in 2023 following a series of market-based setbacks following the COVID-19 pandemic, including higher interest rates and increased material costs, have been exacerbated by the Trump administration’s opposition to green energy, and most directly to offshore wind power. Since Trump took office in January, the U.S. government has frozen all new offshore wind leasing and permitting, frozen some subsidies, and even temporarily shut down construction of the Empire project in the spring before allowing it to move forward.

Those challenges have created greater financial uncertainty around U.S. offshore wind investments, Orsted said in materials released Monday.

"Following the recent material adverse development in the U.S. offshore wind market, it is not possible for Orsted to complete the planned partial divestment and ... project financing of its Sunrise Wind offshore wind project on terms which would provide the required strengthening of Orsted’s capital structure in order to support the company’s investment program and business plan," the company said.

Orsted’s board decided to discontinue the planned divestment and instead turn to the new stock-related transaction to raise $9.3 billion in new capital.

The money will be used to cover costs to complete Sunrise Wind with Orsted as sole owner, while strengthening its finances for other global projects.

The absence of a partner to share the costs of Sunrise Wind requires Orsted to fund the entire project from its own balance sheet, "which leads to an incremental funding requirement" of some $6.2 billion, Orsted said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.