Ørsted has replaced its chief executive, as the world’s largest offshore wind developer seeks to boost its share price and deal with the impact of the Trump administration’s energy policies on its US expansion plans.

A month in to his sudden appointment to the top job, Rasmus Errboe faces a significant challenge to turn around the Danish group’s fortunes. Errboe, at the company since 2012, replaced Mads Nipper on February 1, after the company unveiled $1.7bn in writedowns on its US business, blaming high interest rates, supply chain difficulties and “market uncertainties”.

The most recent impairment comes on the back of a larger than expected writedown of its portfolio in 2023 and the ditching of two of the company’s US projects. Shares in the company, based on the Jutland peninsula in eastern Denmark, have halved in value over the past five years.

Enter President Donald Trump, who has for some time been threatening to “end” offshore wind. On day one of his second term in office, he issued an executive order to pause offshore wind leasing.

Ørsted’s Sunrise Wind project will go ahead since it gained approval in June, but the Danish company is facing pressure on costs, including from US steel tariffs. Construction of the array off Long Island, New York, will cost more than $3bn, with future annual operations, maintenance and leasing coming to roughly $94mn. That will result in an average net present cost of electricity of around $95 a megawatt-hour.

Federal subsidies, notably the investment tax credit offered under former President Joe Biden’s Inflation Reduction Act, projected a reduction to around $75 a megawatt-hour, over twice the cost of solar power generation and some onshore wind projects.

Business transformation

Ørsted traces its roots back to 1972 when it was founded by the Danish government as Danish Oil and Natural Gas, or Dong Energy, with a focus on extracting oil and gas from the North Sea.

When Copenhagen hosted the annual UN climate talks in 2009 — a meeting most notable for its failure to reach an agreement among its 180-plus participating nations — the company was 80 per cent focused on fossil fuels.

By 2017, Dong had changed its name to Ørsted and transformed its core business. By 2023, the company had exited oil and gas, and 70 per cent of its energy was produced from wind with 40 per cent of that from offshore.

The move from oil and gas to wind seemed logical. The North Sea has plenty of wind potential, while its oil and gas resources have dwindled. While power markets are fundamentally different from liquid fuels, and wind turbines from oil platforms, Ørsted had a long history and workforce experienced in managing large projects off the coast of Denmark.

Geographic expansion

The company soon expanded geographically. In 2018, it acquired US wind developer Lincoln Clean Energy and began bidding for offshore projects. It teamed up with local energy producer Eversource to begin construction of Sunrise Wind, using 84 turbines with a combined capacity of 924 megawatts: enough to power almost 600,000 households.

Despite its relatively high costs, offshore wind has clear advantages. It can be produced close to where people live. Wind is typically stronger and blows more consistently over the water, where there are fewer neighbours to object to the turbines.

However, powerful and deep-pocketed opponents exist. The proposed Cape Wind project in Nantucket Sound off Cape Cod, Massachusetts, was awarded the first commercial offshore renewable energy lease in 2010. However, that lease was relinquished eight years later and the project abandoned after a number of delays due to resistance from powerful constituents including the Kennedy family.

Elsewhere, in Scotland, Trump tried years ago to block an offshore wind farm near his golfing development on the Aberdeenshire coast, saying it would ruin the view. His legal challenge was rejected by the UK’s Supreme Court.

Biden’s policies

The Biden administration sought to bolster the fledgling industry, setting a goal of 30 gigawatts of offshore wind by 2030. Those numbers always seemed ambitious. With the Trump administration in place through much of the rest of the decade, they are all but out of reach.

Coastal states such as New York and New Jersey may want offshore wind projects to proceed but the US Department of the Interior must approve any proposals. Investment and production tax credits may also be in jeopardy.

The shifting politics in the US puts the focus back on the economics of offshore wind power. If it were as cheap as onshore wind or solar, it might be hard even for Trump to halt its growth, notably if he seeks to meet his pledge to combat inflation by lowering energy costs. But offshore wind is not cheap, and that may leave Ørsted with few options in the US.