World's Top Wind Turbine Maker Could Book $2.3 Billion In Impairments - OilPrice.com

World’s Top Wind Turbine Maker Could Book $2.3 Billion In Impairments | OilPrice.com

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Danish Orsted, the world’s largest wind turbine maker, has warned it could incur impairments of $2.33 billion (16 billion Danish kroner) on its U.S. operations.

The company blamed supplier delays, insufficient subsidies from the federal government, and higher interest rates for the potential impairments.

Speaking of supplier delays, the company said that it “has concluded that there is a continuously increasing risk in these suppliers’ ability to deliver on their commitments and contracted schedules.”

This created the danger of a knock-on effect that would affect future revenues and lead to additional costs, Orsted said. The extent of the impact was estimated at 5 billion Danish crowns or some $730 million.

As for subsidies, the wind turbine maker said that “our continued discussions with senior federal stakeholders about additional ITC qualifications for Ocean Wind 1 and Sunrise Wind are not progressing as we previously expected.

“We continue to engage in discussions with federal stakeholders to qualify for additional tax credits beyond 30%. If these efforts prove unsuccessful, it could lead to impairments of up to DKK 6 billion.”

The amount mentioned is equal to some $870 million.

Higher interest rates, for their part, could result in an impairment of another 5 billion crowns or $730 million.

This is not the first time Orsted is effectively asking governments for more money. The company’s CEO recently did the same indirectly in the UK, saying in an interview with the Financial Times that the company needed more government support if its latest project there was to work out financially.

“If a project which is by far the biggest in the world, with all these opportunities, can only become investable after having worked intensively for a year with everything, it’s hopefully also a stark reminder to the British government that something must change,” Mads Nipper said.

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Rising raw material costs and higher interest rates have hit the wind power industry hard, especially offshore. Low tender prices for the electricity future wind farms would generate have also caused disgruntlement in the industry. Because of these troubles, Sweden’s Vattenfall recently canceled a large-scale offshore wind project in the UK.

By Irina Slav for Oilprice.com

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