In autumn 2019, perhaps Norway’s two most powerful people boarded a boat in Manhattan. The then Equinor CEO Eldar Sætre showed the company’s new US offshore wind venture to Prime Minister Erna Solberg. The then CEO of Equinor, Eldar Sætre, and Prime Minister Erna Solberg on a boat trip in New York in 2019. Photo: Pontus Höök / NTB scanpix But the adventure has been delayed. Inflation, interest rate increases and cost increases have meant that Equinor has lost millions of dollars on the project – even though not a single turbine has been set up in the sea off Long Island. Equinor’s offshore wind venture in New York Originally three projects: Empire Wind 1 and 2 and Beacon Wind 1. To be located in the sea area off New York. Owns 50/50 together with BP. The plan is that the three projects together will provide electricity to almost 2 million households (3.3 GW). Inflation, delays in the supply chains and interest and cost increases have led to problems with the profitability of the projects. Equinor and BP applied last year to have the agreements renegotiated, but were refused by the authorities in New York. Equinor has written down the value of the projects by approximately NOK 3.1 billion. New York will hold a fast-track auction with an application deadline at the end of January. Source: Equinor Yesterday it became known that Equinor and its partner BP are withdrawing from the agreement for the one project the company is involved in: Empire Wind 2. – This was as expected, says Bård Rosef, who is an equity analyst at the investment bank Pareto Securities. Bård Rosef, equity analyst at Pareto Securities. Photo: PETTER ALNES BONESMO He believes this will not affect Equinor’s investment in offshore wind in the USA. New bidding round Already in January, New York will hold a new auction where companies can bid for Empire Wind 2 again. And Equinor will do that – sooner or later, according to Rosef. – The project will definitely be rebid, but whether they will “make it” now or take the next auction is uncertain, he says. For reasons of competition, Equinor will not comment on whether they will bid in the ongoing auction round in New York. At the same time, the company states that they will now “position themselves”: – We are continuing work with our offshore wind portfolio on the north-east coast of the USA. We are working harder than ever, says Magnus Frantzen Eidsvold, who is press spokesman for Equinor. Magnus Frantzen Eidsvold, press spokesman for Equinor. Photo: Arne Reidar Mortensen / Equinor The reason why the agreement relating to Empire Wind 2 was scrapped now was to avoid a sharp increase in the fee the companies must pay to terminate the contract. The agreement from 2019 also had no protection for inflation. Now the company can instead offer a new and more profitable agreement. Equinor has set itself the goal of having installed 12–16 GW of renewable power by 2030. This goal is firm, Eidsvold emphasizes to news. – We have a disciplined and value-driven approach to offshore wind and renewables, and will build a profitable business, he says. Wind turbines in the Øresund between Copenhagen and Malmö. Photo: NTB Milliardtap When the agreement on Empire Wind 2 was concluded in 2019, there was pure Klondyke atmosphere in the industry. The interest rates and costs were low, the outlook bright. The Danish offshore wind giant Ørsted at one point had a much higher stock market value than Equinor. Ørsted has now written down its projects in the USA with NOK 45 billion and the stock market value of the company is a fraction. Equinor has written down its American projects with approximately NOK 3.1 billion. There are still problems in the offshore wind industry, but analyst Bård Rosef now sees some bright spots. – Interest rates have fallen sharply in the last couple of months, and we have seen a positive development in costs. The balance price (the electricity price the project needs to make a profit) is lower now than just 3–6 months ago. In the UK, Ørsted is continuing with one large project that they cast doubt on earlier this year, while Vattenfall has sold a portfolio of development projects for 1.2 billion dollars, reversing a write-down of 5.5 billion Swedish kroner they made as recently as this summer, he says. The problems in the USA are not the beginning of the end for offshore wind, emphasizes chief analyst Thina Saltvedt at Nordea. Thina Saltvedt, chief analyst at Nordea. Photo: Josef Benoni Ness Tveit / news – This is rather a delay where the offshore wind companies will look at different choices of solutions, improvement of technology and concepts, she says. – Wind power will definitely come.
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Pareto believes Equinor will once again bid for an offshore wind project – news Rogaland – Local news, TV and radio
