Danish energy group Ørsted A/S (CPH:ORSTED) today unveiled plans to pour some DKK 200 billion (USD 30.2bn/EUR 26.8bn) gross in green energy projects by 2025 as it aims to grow its installed capacity by further expanding into the wind, solar, energy storage and bioenergy markets.
Amid expectations for the global renewables market to more than triple towards 2030, the company said its main growth platform will be offshore wind development in Europe, North America and Asia. In view of its pivotal position in the business strategy, Ørsted has upgraded its forecast for the sector, expecting to have 15 GW of installed offshore wind capacity by 2025, as compared to 11 GW-12 GW previously, while it said it will also seek growth in the onshore business and thus become “a leading North American company within renewable energy.” The company’s onshore business encompasses onshore wind, solar and energy storage. The expansion of bioenergy activities is also part of the new strategy, through which Ørsted will seek to lift the share of green energy production to 99% by 2025 from 64% last year.
“Towards 2030, it’s our strategic ambition to reach an installed capacity of more than 30 GW,” said CEO and President Henrik Poulsen. At present, Ørsted’s portfolio includes 11.9 GW of wind and biomass combined heat and power (CHP) assets in operation, under construction or with final investment decision (FID). Additionally, the group has 4.7 GW of projects that have construction concessions but without FIDs, plus a pipeline of under-development projects, the capacity of which was not provided.
FINANCIAL OUTLOOK
In line with the new long-term strategic goals, the Danish firm has updated key operating metrics for the 2019-2025 period. The bulk of the proposed DKK 200 billion capital expenditure, or 75%-85% will go for offshore wind projects, with onshore investments planned to be 15%-20%. Bioenergy and customer solution activities will get between zero and 5% of the sum.
Ørsted anticipates to source around 90% of its earnings before interest, tax, depreciation and amortisation (EBITDA) from contract-based or regulated activities in 2019-2025. The wind sector in particular, is seen to yield EBITDA of DKK 25 billion-26 billion in 2023, rising 20% annually until that year.
Meanwhile, return on capital employed (ROCE) for the seven-year period is expected to be around 10%, which is lower than the company’s previous guidance due to the 50% sale of the under-construction 1,218-MW Hornsea 1 offshore wind farm in the North Sea and the acquisitions of US firms Lincoln Clean Energy and Deepwater Wind that have lifted capital expenditure.
Last but not least, Ørsted confirmed it will raise its annual dividend payout until 2025 “by a high single-digit percentage” as compared to the previous year allocation, considering the forecasts for increased cash flow from future offshore and onshore wind farms. This policy previously was applied only until 2020.
(DKK 1.0 = USD 0.151/EUR 0.134)
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The Borkum Riffgrund 2 offshore wind park. (Ørsted/Matthias Ibeler)
