Ørsted: Is the US at Fault for Offshore Wind Struggles?
Ørsted’s 2025 Q2 results investor presentation blames "material adverse developments in US regulatory landscape" for increasing the perceived risk of offshore wind.
While offshore wind retains strong long-term growth fundamentals, the US regulatory and financing environment has created some short-term challenges for developers.
US regulatory shifts and market risk
Ørsted reports that “unprecedented adverse regulatory developments in the US” have significantly increased the perceived risk of investing in the country’s offshore wind sector.
This shift directly impacts the planned “farm-down” (sale of a project equity stake) and related non-recourse project financing for its 924 MW Sunrise Wind project off New York.
These financing avenues were an integral part of Ørsted’s previously fully funded business plan, but they have proven unworkable under current market conditions.
The inability to proceed with these transactions means Ørsted must now assume full ownership of Sunrise Wind, leading to:
- An incremental funding requirement of ~DKK 40bn (US$6.3bn) between 2025 and 2027
- Additional capital expenditure (CAPEX) over a longer period
- Greater reliance on corporate balance sheet funding rather than external project finance.
Financial and strategic consequences
To bridge this funding gap, Ørsted plans a DKK 60bn (US$9.4bn) rights issue, backed by the Danish State as majority shareholder.
This move aims to:
- Strengthen the company’s capital structure to maintain a solid investment-grade credit rating
- Preserve flexibility in timing partnerships and asset sales, reducing dependency on divestments below 50% ownership
- Safeguard operational cash flows for longer-term value retention.
The shift in US conditions has also influenced Ørsted’s broader market approach:
- Scaling back further US development projects and concentrating on core European and select Asia-Pacific markets
- Ensuring the US onshore business operates as a standalone and autonomous unit.
The company says it is focusing on value over volume in capital allocation, with targeted returns of 150–300 basis points above WACC at investment decision points
President Trump’s beautiful bill
President Donald Trump’s “One Big Beautiful Bill Act” (OBBB Act), signed on 4 July 2025, contains a reversal of some US clean energy policy, dismantling key Inflation Reduction Act incentives and accelerating support for fossil fuels which could be linked to the decrease in offshore wind security
For wind power, the legislation imposes steep tax credit phase-outs from 2027, with Production and Investment Tax Credits only available to projects starting before end-2025 or meeting tight operational deadlines.
Princeton University warns the rollback could cut new wind and solar capacity by 70 GW by 2030, raising household energy costs by US$165 annually and slashing emissions reductions from a projected 40% to just 3%.
These changes may introduce uncertainty for developers, compressing timelines for project starts, complicating supply chain compliance under Foreign Entity of Concern rules and potentially slowing the nation’s offshore and onshore wind build-out at a critical stage for climate goals.
US workforce and community impact
Despite financial challenges, Ørsted continues to invest in socio-economic benefits within the US.
In 2024, its workforce development programme trained 335 union workers across Rhode Island, New York and Connecticut to meet offshore credential requirements.
This supports local job creation and strengthens the domestic supply chain for offshore wind.
The US remains a potentially significant offshore wind growth area.
