Danish wind energy giant Ørsted's shares plummeted 17% on
Monday after the US government issued a stop-work order for the company's
Revolution Wind project off Rhode Island, marking the latest blow to the
offshore wind industry under the Trump administration. The halt affects a
project that was 80% complete, with 45 of 65 turbines already installed in
waters 15 miles southeast of Block Island.
Breaking: US Government Orders Construction Halt on
Revolution Wind Project
The Bureau of Ocean Energy Management (BOEM) issued the
immediate cessation order citing "regulatory compliance concerns" and
"environmental impact reassessment requirements." The $1.5 billion
Revolution Wind project, designed to power 350,000 homes across Rhode Island
and Connecticut, represents one of the largest offshore wind developments on
the US East Coast.
Reuters reports that the decision comes despite Ørsted having invested over $1.2
billion in the project since construction began in 2023. The company had
planned to complete installation by December 2025, with commercial operations
beginning in early 2026.
The halt follows a pattern established by the Trump
administration's January executive orders that suspended new offshore wind
leasing on federal waters and initiated comprehensive reviews of existing
projects. Industry sources indicate that at least six other major offshore wind
developments along the Atlantic coast face similar scrutiny.
"This represents a complete reversal of the previous
administration's renewable energy priorities," said energy analyst Maria
Gonzalez at Deutsche Bank. "The timing couldn't be worse for Ørsted, which
has already committed significant capital to US expansion."
The $9.4 Billion Emergency: Why Ørsted Needs Cash Now
The project halt compounds Ørsted's financial pressures,
which became evident when the company announced a massive $9.4 billion rights
issue on August 11, 2025. The emergency funding represents the largest capital
raise in Danish corporate history and reflects the company's deteriorating
financial position amid mounting US market challenges.
Rights Issue Details and Market Reception
The rights offering allows existing shareholders to purchase
new shares at a 35% discount to the August 10 closing price. Bloomberg indicates that institutional investors have expressed mixed reactions, with
some viewing it as a necessary recapitalization while others question the
company's strategic direction.
Credit rating agencies have placed Ørsted on negative watch,
with Moody's citing "increased execution risks in key US markets" and
S&P warning of potential downgrades if additional projects face similar
regulatory challenges.
The company's debt-to-equity ratio has risen to 1.8x from
1.2x in 2023, primarily due to cost overruns and delays across its US
portfolio. Ørsted has invested over $15 billion in American offshore wind
projects since 2019, making it the country's largest offshore wind developer.
Danish State's Role as Majority Shareholder
The Danish government, which owns 50.1% of Ørsted through
the Ministry of Finance, faces a difficult decision regarding the rights issue.
Political sources in Copenhagen suggest the government will likely participate
to maintain its controlling stake, but internal debates continue about the
scale of support.
Finance Minister Lars Løkke Rasmussen stated in a recent
parliamentary session that Denmark "remains committed to Ørsted's
long-term success" but emphasized the need for "strategic
reassessment of US market exposure." The government's participation could
require approval from the Danish parliament, potentially triggering broader
debates about state-owned enterprise investment strategies.
Trump's War on Wind: Policy Impact Analysis
The Trump administration's offshore wind policies represent
a dramatic shift from the previous administration's renewable energy agenda. Trump's metal tariffs intensify the trade battle, showing how these policy changes align with broader
protectionist trade measures that have reshaped multiple industries.
January Executive Orders and Industry Response
Trump's January 20, 2025 executive orders suspended all
offshore wind lease sales and initiated mandatory environmental impact
reassessments for projects in federal waters. The orders cite concerns about
"impacts on commercial fishing, marine ecosystems, and national security
considerations related to foreign ownership."
The American Wind Energy Association estimates that these
policies could delay or cancel up to 30 gigawatts of planned offshore wind
capacity, representing $100 billion in potential investment. The industry
argues that the US risks falling behind European competitors in offshore wind
technology and manufacturing capabilities.
Domestic steel and shipbuilding unions have expressed
support for the policies, arguing that foreign developers have failed to meet
local content requirements. However, renewable energy workers' unions warn of
significant job losses in manufacturing states like Massachusetts, New Jersey,
and Virginia.
Comparative Analysis: US vs European Renewable Markets
European offshore wind markets continue expanding despite US
policy reversals. The UK recently approved 4.2 gigawatts of new capacity, while
Germany plans to triple its offshore wind capacity by 2030. These markets offer
Ørsted alternative growth opportunities, though at smaller scales than the US
market promised.
The Financial Times notes that European wind projects typically offer more
predictable regulatory environments but face different challenges, including
grid integration costs and permitting delays. Ørsted's European operations
remain profitable, generating €2.1 billion in EBITDA in 2024 compared to €400
million losses from US operations.
The company may need to refocus on European expansion and
maintenance of existing assets rather than pursuing aggressive US growth
strategies. This shift could require fundamental changes to Ørsted's business
model and capital allocation priorities.
Investment Implications: Is This a Buy Opportunity or a Warning Sign?
Ørsted's dramatic share price decline has created sharply
divided opinions among investment professionals. While markets explode higher as the Dow smashes record after
Powell opens door to rate cuts, demonstrating how broader markets have responded positively to recent Federal Reserve
signals, renewable energy stocks continue facing sector-specific headwinds.
Analyst Recommendations and Price Targets
Goldman Sachs downgraded Ørsted to "Sell" with a
target price of DKK 280 (currently trading at DKK 320), citing
"fundamentally altered US market dynamics" and "execution risks
exceeding acceptable levels." The firm estimates that US project delays
could reduce Ørsted's enterprise value by 25-30%.
Conversely, Morgan Stanley maintained its "Buy"
rating, arguing that current valuations already reflect worst-case scenarios.
The bank's renewable energy team believes Ørsted's European market position and
technological expertise justify premium valuations once US uncertainties
resolve.
Nordea Bank, familiar with Scandinavian energy markets,
suggests a more cautious approach. Their analysts recommend waiting for clarity
on the rights issue outcomes and revised US market strategy before establishing
new positions.
Sector-Wide Ripple Effects
Other renewable energy companies have experienced sympathy
selling, with Equinor's renewable division declining 12% and Vattenfall falling
8% since the Ørsted halt announcement. The sector's correlation with political
developments has increased significantly, making traditional financial analysis
more challenging.
Utility companies with offshore wind exposure face similar
pressures. Avangrid, which partnered with Ørsted on several US projects, has
seen its shares decline 15% amid concerns about project viability and cost
recovery through regulated rate structures.
The broader renewable energy equipment sector also shows
stress signals. Wind turbine manufacturers like Vestas and General Electric's
renewable division face questions about US order backlogs and supply chain
investments planned around projected offshore wind growth.
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