Ørsted Anticipates ‘Significantly Higher’ Offshore Earnings in 2023; Plans EUR 7 Billion in Gross Investments

Ørsted reported an EBITDA of DKK 21.1 billion (approximately EUR 2.84 billion) for 2022 and expects this year’s operating profit to be in the similar range, between DKK 20 billion and DKK 23 billion (approx. EUR 2.67 billion and EUR 3.09 billion). For its offshore business, the developer anticipates 2023 earnings to be “significantly higher”. Offshore wind is also one of the main drivers behind the company’s expected gross investments planned for this year, which are estimated to be around EUR 7 billion.

• Gross investments for 2023 amount to around EUR 7 billion
• 2023 offshore wind investments slated for Taiwan, Germany, and the US

This is according to Ørsted’s 2022 annual results, which show the company’s Offshore EBITDA, excluding new partnerships, was at DKK 8.6 billion (approx. EUR 1.16 billion) last year. For 2023, the offshore wind developer expects it to climb by DKK 6.5 billion (approx. EUR 873 million).

Looking at the year still ahead of us, Ørsted says the net positive impact on its EBITDA in 2023 will be driven by, among other things, the ramp-up of generation from its Greater Changhua 1 & 2a offshore wind farm in Taiwan, which is expected to be commissioned in the second half of this year.

The developer also expects a net higher generation from its Hornsea Two offshore wind farm in the UK and lower balancing costs; however, this will be also accompanied by higher OPEX and likely lower trading results.

Furthermore, Ørsted does not expect the negative impact from overhedging and ineffective hedges, which it encountered in 2022, to be repeated in 2023, and it also anticipates a minor boost to its earnings from existing partnerships.

The company forecasts that its 2023 Offshore earnings will also see an effect of Contract for Difference (CfD) and renewable obligation certificate (ROC) offshore wind farms getting a material inflation adjustment in the last three quarters of this year.

For the Offshore segment of its business, Ørsted also expects a DKK 0.8 billion (approx. EUR 107 million) increase in costs related to project development, Power-to-X, and general costs.

“Our offshore wind farms are largely subject to regulated prices, implying a high degree of revenue certainty. This means that we know the price per generated MWh for most wind farms in Denmark and Germany, our first Dutch wind farm, and the CfD wind farms in the UK. For our British ROC wind farms, we also know the subsidy per generated MWh which we will receive in addition to the market price”, the company states in the financial outlook for 2023.

“The part of our generation from offshore and onshore assets which is exposed to market prices has, to a large extent, been hedged for 2023”.

Ørsted further says that the most significant uncertainty to the company’s operating profit for this year (on a Group level) is the power generation, which depends on wind conditions, the ramp-up of new wind and solar assets, asset availability, the timing of possible farm-downs, and the attractiveness of spreads on its CHP plants.

Gross investments for 2023 are expected to amount to DKK 50-54 billion (approx. EUR 6.72 billion to EUR 7.26 billion), mainly driven by its offshore wind and onshore renewables businesses, as well as timing effects between years that saw lower level in 2022 and postponement to 2023.

In offshore wind, Ørsted lists its investments this year to be in Greater Changhua 2b & 4 and Greater Changhua 1 & 2a, both in Taiwan, Borkum Riffgrund 3 and Gode Wind 3 in Germany, Ocean Wind 1 in New Jersey, as well as the developer’s US Northeast cluster projects.