- Orsted presented a solid Q1 2024 quarterly report.
- Pipeline of offshore wind projects is large (7.6 GW under construction) and the 2030 goal is 20-22 GW. Huge opportunities with global goals for trebling renewables by 2030.
- Concrete opportunities in AI and new geographic areas like Australia and Denmark expansion.
- Global risks include inflation persisting, supply chain issues, US politics, but fate of LNG industry is a key influencer on the future of offshore wind (and hence Orsted’s prospects).
- Notwithstanding significant uncertainties, my take is that this is a good time to consider investment in Orsted.
I’ve written about the emergence of offshore wind as a major emerging contributor to decarbonizing the global energy system, but I have been early in my assessments. Perhaps this is not unexpected for new technology investments that require substantial upfront cash. The recent high interest rate environment, combined with supply chain issues resulting from the COVID pandemic, certainly hasn’t helped. There have been several technical innovations (e.g. floating and bigger wind turbines) and geopolitical challenges (Russian invasion of Ukraine) which have meant that there is a new urgency to make offshore wind a, if not the, key contributor to exit from fossil fuels. Here I provide an overview of what’s happening and how the major offshore wind developer, Orsted (OTCPK:DNNGY) is likely to benefit, notwithstanding that its share price has performed poorly over the past 12 months (down 32.9% year-on-year). Europe continues to spearhead this process by getting momentum to build out its offshore wind infrastructure, but this change is by no means restricted to Europe. The US is at last getting into the game, and developments in Asia, Southeast Asia and Oceania all look like they will become major. Orsted is the world’s biggest offshore wind developer and recent reports suggest that after a tough 2023 the wind is beginning to blow in a serious way. I think this is a good time to think again about offshore wind as the industry shows signs of recovery. The plan to treble renewable energy capacity by 2030 suggests that a very favorable environment is emerging.
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