Orsted said today it would continue with a plan to raise capital after the Trump administration ordered the offshore wind farm developer to stop construction on a near-completed project off Rhode Island, sending its shares down 17%.
The company, 50.1% owned by the Danish state, said earlier this month it would seek to shore up its finances through a $9.4 billion emergency rights issue.
"The planned rights issue had been sized to provide the required strengthening of Orsted's capital structure to execute its business plan, even when taking into account the impact of this uncertainty on Orsted's US offshore wind portfolio," it said in a statement.
The Trump administration's Bureau of Ocean Energy Management (BOEM) published its stop-work order on Friday, forcing suspension of a project that was 80% complete with 45 out of 65 wind turbines installed.
The timing of the halt to Revolution Wind off Rhode Island was particularly damaging to Orsted, which announced earlier this month a plan to raise 60 billion Danish crowns ($9.42 billion) through a rights issue.
Orsted's shares, already down 30% since announcing its plan on August 11, fell as much as 17% in early trading today.
"This is a huge hurdle with regards to raising capital," Sydbank analyst Jacob Pedersen told Reuters, adding he was "stunned."
AlphaValue analyst Pierre-Alexandre Ramondenc said the US move could jeopardise the success of the rights issue.
"The news came as a major shock and amounts to nothing less than political hostage-taking by the US administration, given the project's advanced stage," Ramondenc said.
On his first day in office in January, President Donald Trump suspended new offshore wind leasing pending environmental and economic review of projects. He has repeatedly criticised wind energy as ugly, unreliable and expensive.
With construction now frozen at 80% completion, Orsted has no immediate path to revenue generation.
The stop-work order, issued by the Bureau of Ocean Energy Management (BOEM), is the US administration's latest effort to hinder US renewable energy development.
It marks the second time this year that the Interior Department, which oversees BOEM, has halted work on a major offshore wind project.
"Orsted is evaluating all options to resolve the matter expeditiously," the company said in a statement, adding that it was reviewing the financial implications of the order and was considering legal action.
The company said it would "in due course" advise the market on the potential impact on its plans to conduct the rights issue.
The $1.5 billion project that Orsted was constructing, Revolution Wind, was scheduled to be completed next year and expected to produce enough electricity to power 350,000 homes in Rhode Island and Connecticut.
All offshore foundations had been installed and 45 out of 65 wind turbines were already in place, Orsted said.
The National Ocean Energy Industries Association, an industry trade group, said halting work on a project that is almost finished would jeopardise jobs and investment.
"These projects are not only about energy," NOIA President Erik Milito said.
The stop-work order is driven by unspecified national security concerns arising from the US administration's review of offshore wind projects in federal waters, according to the letter, signed by BOEM acting Director Matthew Giacona.
The bureau is seeking to protect US national security and prevent "interference with reasonable uses of the exclusive economic zone, the high seas, and the territorial seas," Giacona said.
Orsted is among the biggest global offshore wind companies, but its US business has suffered setbacks in addition to the broader challenges facing the global offshore wind industry, which is struggling to meet ambitious government targets amid soaring costs and project delays.
Earlier this month, Orsted sought the $9.4 billion of financing from shareholders to help fund its Sunrise Wind project off the New York coast after potential partners pulled out due to Trump's hostility to wind power.
Potential co-investors for the Sunrise Wind project pulled out after Trump's administration in April ordered Equinor to halt the development of a fully-permitted wind farm. The order, which sent shockwaves through the industry, was reversed the following month, however.
Reporting by Reuters
