Sunday, December 10, 2023

Orsted Stock Market Collapse Punishes Renewables in Spain

The shares of the Danish company Orsted fell 25.69% on the stock market and were traded at 252.5 Danish crowns (about 33.8 euros) after the company announced that it would stop the development of two wind projects in the United States, the Ocean Wind 1 and 2 So the company exacerbated the annual decline of up to 60%. Among the reasons for this decision, the company highlighted the increase in financing costs due to high interest rates and supply chain problems. The crash of Orsted’s stock market, which traded at a six-year low, affected the renewable energy sector, including Ibex. Acciona Energía lost 0.23% while Solaria fell 0.49%, although at the intraday level both fell 2.8%.

“Challenges in the supply chain, which led to delays in the project schedule, and the increase in interest rates, led us to this decision,” said CEO Mads Nipper about the stalled projects in EE. Also, he said that he considers it “impossible” to know how long the crisis will last. This Wednesday the Danish renewable energy giant also presents its quarterly results. Orsted noted the deterioration of about 28.4 billion Danish crown (about 3.81 billion euros) in the third quarter of the year for its offshore wind portfolio in the United States.

In the North American country, developers are quickly backtracking their offshore wind farm development plans and asking to renegotiate their agreements due to rising costs. These problems put at risk President Joe Biden’s commitment to clean energy, which he intends to help fight climate change and reduce inflation. However, the main headaches for these companies include supply chain difficulties and the rise of high interest rates, which have increased costs by 30% from 2019 levels, according to to some analysts.

The shares of the Danish giant, valued at 24 billion euros, had already suffered a collapse in August when the company spoke for the first time about the difficulties in the offshore wind sector and announced losses worth 2 billion dollars in American projects. Faced with this scenario, some analysts are negative. “We continue to see a significant appreciation of Orsted shares as difficult in the near term,” Jenny Ping, an analyst at Citi, said in a note.

However, part of it considers that the shares continue to run on the stock market and it gives a potential for evaluation of 88.5%, up to 542.77 Danish crowns (about 72.7 euros ). The majority of analysis companies recommend keeping the shares of the listed company in their portfolio (52.9%), compared to 44.1% who advise buying and 2.9% who believe it is best to sell.

The fall of Orsted adds to the crisis of the German group Siemens Energy, a company that on Thursday fell by 30% on the Frankfurt Stock Exchange after it became known that it negotiated with the German Government a rescue of Siemens Gamesa, the energy business. wind High financing costs and millions of dollars in losses at the Spanish subsidiary led the company to seek support to strengthen its balance sheet.

The crisis in the sector, however, has spread. In China, leading turbine maker Xinjiang Goldwind Science & Technology announced that third-quarter profit fell 98%, while Norwegian energy giant Equinor ASA suffered a $300 million impairment of wind projects in off the coast of the USA

World Nation News Desk
World Nation News Desk
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