Ørsted to invest US$57 billion to quadruple renewable energy portfolio

Orsted’s first utility-scale solar storage hybrid project in the US came online last month. Image: Orsted

Danish renewables developer Ørsted has said it plans to invest DKK 350 billion (US$57 billion) by 2027 to reach 50GW of installed clean energy capacity by the end of the decade.

The company made the pledge to more than quadruple its current power portfolio during its Capital Markets Day announcement. The majority of the new renewables capacity will come from offshore wind, with 30GW to be installed globally by 2030 as well as 17.5GW of onshore wind and solar PV, and 2.5GW of other resources such as biomass and green hydrogen. The company said on Wednesday it intends to spend DKK 350 billion by 2027 to achieve this, up from an earlier commitment of DKK 200 billion by 2025.

Around 80% of the DKK 350 billion will be allocated to offshore wind and hydrogen projects, it said, with the remaining 20% set aside for onshore developments.

As it builds out the renewables portfolio, Ørsted said it expects its EBITDA from offshore and onshore projects to grow by 12% annually starting from 2020 to 2027, assuming that it will only hold a 50% stake in its assets. The anticipated growth rate is equivalent to EBITDA of between DKK 30 billion and DKK 40 billion by 2027.

Mads Nipper, who become Ørsted’s group president in January, said that the company aims to become “one of the 10 top players” in onshore renewable energy capacity, as well as a global leader in green hydrogen production.

“With this strategic ambition,” he said, “we’re positioning Ørsted to be a leading player in a future energy system with more renewable energy which will be much more integrated across technologies and tied together by new infrastructure and increased digitalisation.”

The Danish group, which sold its own oil and gas business in 2017, has gone on to build out a 12GW renewable energy portfolio predominantly focused on offshore wind, but is also becoming a fierce competitor in utility-scale solar. It completed its first utility-scale solar-plus-storage facility in the US last month, which onshore business COO Neil O’Donovan said marked a significant milestone as it become the first developer to own and operate a “full spectrum” of new utility-scale renewables projects in the country.

However, competition is heating up between utilities and oil and gas majors as countries make more commitments to deploy green energy systems to lower their carbon emissions. Spanish energy giant Iberdrola said on February that it plans to spend €150 billion US$182.9 billion by the end of the decade to nearly triple its renewables capacity to reach 93GW. Oil and gas company Shell has pledged to spend between US$2 billion and US$3 billion annually to reach net-zero by 2050, following previous commitments from Total, RepsolGalpBPEni and Equinor.

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