US green power demand expected to grow regardless of election outcome
Aritcle by Jacob Gronholt-Pedersen and Stine Jacobsen from Reuters
Demand for green power in the United States will grow regardless of who is the country’s next president, major players in the wind energy sector Vestas and Orsted said on Tuesday.
Offshore wind developers have seen profits shrink in recent years due to rising raw material costs, high interest rates, inadequate grid connections, supply chain bottlenecks, and Chinese competition, prompting companies like BP and Equinor to scale back their ambitions.
In the United States, the nascent offshore wind industry has been roiled by cancelled projects, postponed lease sales and a construction accident at the country’s first major offshore wind project.
Orsted on Tuesday flagged construction problems and higher costs at a large U.S. offshore wind project.
Democratic Vice President Kamala Harris has championed ambitious offshore wind targets as part of President Joe Biden’s administration.
She is in a tight race with Republican candidate Donald Trump, who has said he will scrap offshore wind projects through an executive order on his first day in office if he retakes the White House, claiming wind turbines ruin the environment and kill birds and whales.
“We see many – both corporates and states – having an increased demand from reshoring of industries and from the tech industry,” Orsted CEO Mads Nipper told journalists on Tuesday.
“We see it as an all boats rise situation where all energy sources, not least for electricity, are needed no matter who ends up in the White House.”
NEW GREEN ELECTRICITY NEEDED
Shares of Vestas, the world’s largest wind turbine manufacturer, slumped more than 10% on Tuesday after the company warned of lower profit margins this year.
Vestas CEO Henrik Andersen downplayed investor concerns around Tuesday’s election outcome.
“I don’t think there’s any of the order intake that is dependent on today’s election,” he said at an analyst call.
“There is a general need and demand higher than the supply right now for new green electrons to data centres among other things,” he added.
Orsted, the world’s biggest offshore wind farm developer, last year booked massive impairments for cancelled U.S. offshore projects due to rising inflation, higher interest rates and supply chain delays.
“It’s an industry being built from scratch and it is being very strongly supported by not least the northeastern states, where the alternatives for energy supply and especially green energy supply are difficult,” Nipper said.
Orsted said scarce installation vessels and problems with installing an offshore substation at the 704 megawatt (MW) Revolution Wind project contributed to costs rising by another 1.7 billion Danish crowns ($248 million) in the third quarter.
Group operating profit fell 14% to 4.44 billion crowns in the quarter. Analysts had on average forecast 4.61 billion in a company-provided poll.
Profits were helped by a reversal of some of the losses Orsted booked last year in the United States.
Its shares were down 1.5% at 1239 GMT. They have risen some 12% this year but are down more than a third from their peak in early 2021.