Orsted stock offering details risks it faces in completing Sunrise Wind project

Danish wind-energy conglomerate Orsted’s plan to raise more than $9 billion through a stock offering chiefly to fund the completion of Sunrise Wind comes as the company faces risks and challenges that go beyond Trump administration opposition to green power, according to financial filings Monday.

In a 215-page stock offering filed in Copenhagen, Orsted outlined the myriad risks it faces as it goes to market to issue 900 million new shares of stock — about $6.3 billion of which is earmarked to finish construction of Sunrise Wind, which would deliver its 924 megawatts of power to Long Island.

Despite that eye-popping price tag, which is far higher than previously published cost estimates for the entire project of about $4 billion, Orsted through a spokeswoman refused to say how much the total development and construction costs are expected to be for Sunrise, whose power would reach the Long Island grid from a long undersea cable at Smith Point, if it hits its revised completion date of the second half of 2027.

"We haven’t disclosed that [figure]. Sorry," Orsted spokeswoman Meaghan Wims said in an email Monday.

Land-based construction of Sunrise Wind, chiefly through the Town of Brookhaven, is nearly complete. Offshore, the company said in its stock filing it had installed the first of 84 monopiles in early June, and completed 25 of 84 turbine foundations in the waters off Rhode Island/Massachusetts.

The Sunrise offshore work is "at an early stage and remains subject to risks such as challenging soil conditions in a limited number of turbine positions and dependence on the continued performance of the turbine installation set up" that had been at work on sister project Revolution Wind. "Leg damage" to a turbine installation vessel during Revolution Wind work "will have knock-on impact on Sunrise Wind’s turbine installation schedule," the filing states.

The company described adverse and "unforeseen" soil conditions at Revolution Wind that "resulted in an incident in which one of the offshore substations was out of vertical tolerance." The foundation had to be removed and reinstalled, the company said. Revolution is being built in adjacent waters to Sunrise. 

Sunrise Wind also remains subject to risks such as "challenging soil conditions in a limited number of turbine positions," Orsted said. 

But work on Sunrise Wind continues. On Sept. 10, the offshore converter station was undergoing "final preparations ahead of installation" in the water. Around 90% of the onshore converter station in Holtsville is complete, the company said, and the interconnection cable is "energized." The project, which the company has said could power some 600,000 homes, is subject to a 25-year contract with New York State.

Orsted’s business model of developing big energy projects around the globe and divesting portions of them to outside companies has been hampered by economics and political changes to the offshore wind market, primarily in the United States, the company said. Orsted previously canceled two projects planned for New Jersey and is battling a stop-work order by the Trump administration for Revolution Wind that is costing it $15 million a week.

In addition to acknowledging "significant losses" tied to supply chain "dependences" on third-party companies, Orsted cited "regulatory uncertainties" in the United States and other "unforeseen challenges" that could lead to further project delays, cost overruns or "lead to projects being canceled," according to the filing.

Despite being unable to find a partner for Sunrise Wind, the company plans to sell off other existing wind-energy assets to reap an anticipated $5.5 billion this year and next, but could still face ratings downgrades, it said. Last year, Orsted paused paying dividends to its shareholders (the Danish state owns 50.1 % of the company), and won’t pay dividends until the end of 2026. The company’s share price has experienced a series of sharp declines in recent years and weeks, from a high of more than $74 in 2021 to $10.37 Tuesday morning. The latest stock plan offers shares at a 67% discount to recent share prices.

Despite moving ahead with a lawsuit against the Trump administration to restart Revolution Wind, the company said that as of Monday, "there is no certainty as to if and when the Revolution Wind order will be lifted, and, even if lifted, there can be no assurance that further government actions to halt construction would not be taken." The order is causing "significant uncertainty for the timelines, costs and feasibility" of Revolution Wind, while also impacting timelines for Sunrise Wind.

"The Revolution Wind [stop-work order] may have consequential effects on Sunrise Wind," depending on how long it remains in effect, the filing states. In addition, "uncertainties associated with steel and aluminum tariffs are expected to impact project costs, as several components have not yet arrived on site."

Revolution Wind has cost Orsted $2.5 billion to plan, permit, design, manufacture, and construct, reflecting only Orsted’s half of the venture, putting total project costs to date at $5 billion, according to the filing. Were the project to be shut down, it would cost Orsted another $500 million in cancellation, decommissioning and other costs, the company said.

Orsted owns 50% of the Revolution, which would sell its energy to Connecticut and Rhode Island. It’s also affecting timelines in the anticipated completion of Sunrise Wind, because some of the vessels being used for Revolution "were planned to also be used for the Sunrise Wind project following completion of Revolution."

The potential impact for Sunrise could amount to $10 million per week "to be incurred in the future for the Sunrise Wind project due to known-on delays," the filing stated.

On top of delay impacts, the Orsted filing notes the impact of Trump administration tariffs on steel, aluminum and other wind-array components for the first six months of this year has led Orsted to take impairment charges of $189.2 million for Sunrise and Revolution wind projects, with another $180 million possible in the future, the company said.

But when completed, the company expects a combined $3.9 billion in tax returns from its Revolution and Sunrise wind projects, which are both still eligible for 30% federal tax credits and possibly another 10%, the filing states, with tax proceeds expected to come from 2026 through 2028, the report states.

If the stop-work order isn’t lifted until late September, the filing states, Orsted estimates it may incur "significant additional costs of an uncertain amount," and may be required to negotiate new supply contracts, further increasing costs and possible penalties.

In the worst-case scenario, Revolution Wind "would be canceled" if work can’t be completed on schedule this season.

As for Sunrise Wind, "for each day that the Revolution Wind [stop] work order remains in effect, and assuming that vessels currently contracted for Revolution Wind cannot be redirected for use on Sunrise Wind, Orsted may incur a corresponding day’s delay to the turbine installation schedule for the Sunrise Wind project, which will delay the start of revenues."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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