Equinor Takes $300 Million Hit on U.S. Offshore Wind, But Remains Hopeful - gCaptain
Equinor Takes $300 Million Hit on U.S. Offshore Wind, But Remains Hopeful
OSLO, Oct 27 (Reuters) – Norway’s Equinor booked a $300 million impairment on its U.S. offshore wind power portfolio on Friday after New York officials rejected a request for better terms, but said the state’s continued commitment to the technology still offered hope.
The charge, announced during Equinor’s earnings, comes two weeks after New York regulators turned down the company’s petition to renegotiate the terms of its offshore wind projects because of soaring costs and supply chain constraints.
“We were disappointed by the rejection of the price adjustment for the contracts,” Equinor CEO Anders Opedal told the group’s earnings presentation.
“But shortly after, New York’s governor announced a 10-point plan and we are in the process of looking at what that means for us and the potential opportunities for our projects.”
The plan included a potential expedited new auction presented by New York regulator NYSERDA late on Thursday, Opedal said.
In the document, NYSERDA mooted the possibility of new offshore wind awards in the first or second quarter next year that would also be open to projects that “were previously contracted with NYSERDA or other state offtakers.”
Equinor and partner BP BP.L are planning to build the Empire Wind 1, Empire Wind 2 and Beacon Wind farms off New York. They will have a combined capacity of 3,300 megawatts, capable of powering 2 million homes.
Opedal said in order to go ahead with the projects Equinor needed to see “reasonable profitability” and “robustness compared to the risk.”
Worldwide, a perfect storm of supply chain delays, design flaws and higher costs in the offshore wind industry has put dozens of projects at risk of not being delivered in time for countries to meet climate goals.
Equinor’s impairment contributed to increasing the net operating loss at its Renewables unit to $412 million from $56 million a year ago.
In documents relating to the petitions, Equinor and BP said they were facing upfront capital investments for these projects “in excess of $20 billion.”
(Reporting by Nora Buli and Nerijus Adomaitis; Editing by Christian Schmollinger and David Holmes)
(c) Copyright Thomson Reuters 2023.
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Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
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- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”