Renewable Energy Sector Faces Turbulence Amid Trump’s Executive Order
The renewable energy industry, particularly in Europe, is reeling from a one-two punch: President Trump’s executive order halting US offshore wind lease sales in federal waters, and Danish offshore wind developer Orsted’s revelation of massive impairment charges.
Orsted’s Impairment Charges Send Shares Plummeting
Orsted’s shares took a nosedive, plummeting as much as 18% in Copenhagen, after the company announced an impairment charge worth 12.1 billion Danish kroner ($1.68 billion) at its troubled US unit. CEO Mads Nipper expressed disappointment, citing “construction challenges” and “complexities and uncertainties” in the US market. The impairment charge is attributed to interest rate increases, seabed leases, and delays in the Sunrise Wind project off the coast of Montauk, New York.
Analysts Weigh In: “Surprise” and “Negative”
Goldman analysts Alberto Gandolfi, Mafalda Pombeiro, and Dhwani Khenwar described Orsted’s announcement as a “surprise” and warned of potentially more to come. They maintained a “Neutral” rating on Orsted with a 12-month price target of 445 Danish kroner. Other analysts, including Citi, RBC, Jefferies, and Barclays, expressed grave concern, citing elevated risks across the US offshore wind and renewable energy industries.
Trump’s Executive Order Adds to Industry Gloom
President Trump’s executive order, which suspended new offshore wind lease sales in federal waters and halted approvals, permits, and loans for both onshore and offshore wind projects, has sent shockwaves through the industry. The move has weighed on renewable shares, with the iShares Global Clean Energy ETF (ICLN) sliding in premarket trading.
Cloudy Outlook for Renewable Energy
The combination of Orsted’s impairment charges and Trump’s executive order has cast a shadow over the renewable energy sector. Analysts warn of increased risks, particularly in the US offshore wind industry, where the values of seabed leases may plummet to zero. As the industry navigates these challenges, one thing is clear: the road ahead will be fraught with uncertainty.
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