Battered Orsted sticks to sell-off strategy and lines up bidder for giant UK asset

Orsted will stick to its divestment strategy in core markets unfettered by US President Donald Trump’s hostility to offshore wind, the Danish utility’s chief financial officer said, and is advancing in its search to find a buyer for part of its giant Hornsea 3 offshore wind project in the UK.

Orsted, as part of its growth strategy, customarily sells half or more of each of its projects to other developers or financiers to fund its current and next projects.

The company’s CFO Trond Westlie in an investor call acknowledged that “it is a buyers’ market” for offshore wind stakes, “which we see reflected in the return requirements from the potential incoming partners.”

Despite the failure to farm down Sunrise Wind, the utility still expects more than DKr35bn in proceeds from divestments this year and next.

The biggest chunk of that likely will come from a part-sale in the 2.9GW Hornsea 3 project for which “as of today, we are well progressed with a preferred bidder”, the CFO revealed.

Westlie didn’t tell who the possible buyer is, nor when exactly a 50% stake in Hornsea 3 would be sold but said that the transaction is according to timeline Orsted had “all along”.

“All other farm downs are progressing as planned,” he said.

That also includes the part sale of the Greater Changhua 2 project, for which Orsted has already secured project finance.

The utility also has launched the sales process for potential full divestment of its European onshore business.

While continuing its divestment strategy in its core European and APAC markets, the rights issue will allow the company to have a more value accretive and flexible approach to timing of farm-downs.

There will also be a more flexible approach on whether to divest below 50% ownership of operational assets, Orsted stressed.

In the wake of the recent trouble with the company’s US offshore wind developments, CEO Rasmus Errboe at the same investor call stressed that Orsted would go for “value over volume” and won’t “pursue opportunities just to fulfil a hole in [development] pipeline”.

As there are about 110GW of “centralised tenders in our core markets in the coming years”, the company has “plenty of opportunities for attractive growth in Europe”, he said.

Vote of confidence for Hornsea 4

Errboe stressed that the current financial restructuring process does not signify a retreat from future projects.

He gave a vote of confidence to the 2.4GW Hornsea 4 in the UK, despite the decision to cancel the CFD for that project in May.

"The decision we are taking today has absolutely no implications regarding our continued strong appetite to continue with Hornsea 4," Errboe said.

"The capital we have raised will lay a robust and solid foundation and allow us to continue with our most value-accretive opportunities….we will certainly continue to develop Hornsea 4.

"We still have a grid connection, we still have our development consent rights and such, so we will continue.We expect to return with Hornsea 4 to alater auction round," he added.