“Ørsted is evaluating all options to resolve the matter expeditiously. This includes engagement with relevant permitting agencies for any necessary clarification or resolution as well as through potential legal proceedings, with the aim being to proceed with continued project construction towards COD in the second half of 2026.”
Following the announced $9 billion rights offering to shore up its finances, Orsted’s long-term issuer credit rating has been downgraded to BBB- by S&P, just one step above junk.
Ørsted’s stock price plummeted on Monday following the announcement of a $9.4 billion rights issue to fund the Sunrise Wind project. The share price has remained depressed (chart below).
Also, although Ørsted attributes its financial woes to the change in US policies, it’s apparent in the second chart (5 year trend) that the decline in Ørsted’s valuation has been ongoing since 2021.
In March, Fitch downgraded Ørsted’s rating to BBB from BBB+, and its subordinated rating to BB+ from BBB-. Further downgrades would seem to be a distinct possibility.
Meanwhile, decommissioning financing for the 3 Ørsted projects under construction in the US Atlantic is far from assured:
Revolution Wind:As they did for Vineyard Wind, BOEM approved Ørsted’s request to defer full decommissioning financial assurance until 15 years after the beginning of construction (see attached letter). This approval was prior to the Renewable Energy Modernization Rule (effective June 29, 2024), which eliminated the need for such waivers.
Sunrise Wind: Ørsted is now solely responsible for funding and constructing this project given the company’s failure to find investment partners. Presumably, decommissioning financial assurance was not required given BOEM’s latitude under the so-called “Modernization Rule.”
South Fork Wind: As is the case with Sunrise Wind, BOEM presumably allowed Ørsted to defer financial assurance for decommissioning as permitted by the “Modernization Rule.”
According to Ørsted, almost 70% of the turbines are installed at Revolution Wind and the first foundations have been installed at Sunrise Wind. South Fork Wind, 12 turbines and an offshore substation, is complete.
Given Ørsted’s strained finances, will BOEM now opt to require decommissioning assurance as provided for in 30 CFR § 585.517?
Ørsted’s situation is atypical in that the Danish government owns a majority (50.1%) stake in the company and Equinor, which is 2/3 Norwegian govt owned, holds a 9.8% stake. How will government ownership factor into BOEM decisions regarding decommissioning assurance? Note that Norwegian govt lobbying may have been one of the factors influencing the decision to allow the resumption of construction on Equinor’s Empire Wind project.
BOEM’s streamlining rule codified the deferred financial assurance option. The rule authorizes the transfer of decommissioning risks from developers to taxpayers and consumers by (1) not requiring any additional supplemental financial assurance at the Construction and Operations Plan (COP) approval stage, (2) not requiring supplemental assurance at the installation stage, and (3) providing for incremental supplemental assurance post-installation (e.g. for Vineyard Wind, the full amount is not due until 15 years after installation). See the rule’s previous and current language in the table below (emphasis added).
30 CFR 585.516 – What are the financial assurance requirements for each stage of my commercial lease?
financial assurance required before BOEM will:
language prior to 4/24/2024 “modernization” rule
current language
Approve your COP
A supplemental bond or other financial assurance, in an amount determined by BOEM based on the complexity, number, and location of all facilities involved in your planned activities and commercial operation. The supplemental financial assurance requirement is in addition to your lease-specific bond and, if applicable, the previous supplement associated with SAP approval.
There is no supplemental bond requirement at the COP approval stage.
Allow you to install facilities approved in your COP
A decommissioning bond or other financial assurance, in an amount determined by BOEM based on anticipated decommissioning costs. BOEM will allow you to provide your financial assurance for decommissioning in accordance with the number of facilities installed or being installed. BOEM must approve the schedule for providing the appropriate financial assurance coverage.
A supplemental bond or other authorized financial assurance in an amount determined by BOEM based on anticipated decommissioning costs of the proposed facilities. If you propose to incrementally fund your financial assurance instrument, BOEM must approve the schedule for providing the appropriate financial assurance.
The current financial assurance language is fuzzy enough that BOEM could deny deferred funding requests and require full financial assurance at the time facilities are installed. However, revising the language to clearly require that assurance be fully demonstrated prior to installation would provide clarity and eliminate the deferral option going forward.
The more difficult challenge may be adjusting financial assurance requirements for the projects already under construction. It’s also important to ensure that parent corporations are not shielded from decommissioning and other liability risks.
BOEM tweet (12/8/2023):Offshore wind is a once-in-a-generation opportunity to build a new clean energy industry, tackle the climate crisis, and create good-paying jobs, while ensuring economic opportunities for all communities.BOEM tweet (7/31/2025): America’s offshore energy resources are powering the nation. In FY2024 that looks like 668M barrels of oil, 700B cubic feet of natural gasBSEE 2023 logoBSEE 2025 logo
BTW, the new BSEE logo appears to have been influenced by the masterpiece Rig at Sunset 👍 😉
A new court filing (attached) informs that the Dept. of the Interior is reconsidering the Construction & Operations Plan (COP) approval for US Wind’s Maryland Offshore Wind (“MarWin”) Project (maps above). That approval is the subject of litigation filed by Ocean City MD and others.
The key section of the Federal government’s filing is pasted below.
An extension in this case is necessary as Interior intends to reconsider its COP approval and move in the District of Maryland—the first-filed case—for voluntary remand of that agency action. See, e.g., Util. Solid Waste Activities Grp. v. EPA, 901 F.3d 414, 436 (D.C.Cir. 2018) (recognizing that administrative agencies have the authority to reconsider their decisions). The outcome of Interior’s reconsideration has the potential to affect the Plaintiff’s claims in this case.
“The government documents for ALL the Atlantic projects make it clear that there will be no benefit to climate change from implementing wide scale offshore wind.”
“And how is it possible that an attorney representing an island that is receiving the full brunt of the environmental impacts from this massive industrial project is lecturing the press that historic preservation can co-exist with offshore wind? The sight of just the first 40 towers from Vineyard Wind makes it clear they can’t.”
“Blindly following public relations statements about offshore wind as a critical solution to climate change that must be implemented immediately is how we got here in the first place. It has become clear that Nantucket receives no benefits from, but is significantly harmed by, Vineyard Wind. Our Select Board’s role should not be to advocate for any energy source that harms Nantucket.”
“Dawn Hill, a signatory to the Good Neighbor Agreement and the current Select Board Chair, was a bright spot in the meeting. Her acknowledgment that the project is way more impactful than communicated at the time the Good Neighbor Agreement was signed gives hope that more rational thinking and action is on the way.“
As indicated in the Jens Christiansen graphic above, Denmark’s net imports exceeded 80% of demand several times in July. Per Jens, a Danish physicist, “this is the downside of being a wind leader we have to talk about.”
MV Times: “The recent site visit raised questions on the production of the wind farm. The Times has been able to neither verify the report independently nor confirm disparities between visuals on the ground and the Iberdrola report.”
Avangrid, an Iberdrola subsidiary and one of Vineyard Wind’s developers, reported that 17 out of 62 turbines were currently sending power to the Massachusetts grid.
The MV Times counted between five and nine turbines spinning at different points, and for different intervals, in their two hour visit.
BOE comment: Although there are many possible reasons for this discrepancy, it’s reasonable to question the absence of turbine output data. Developers assert that generator specific data are sensitive and could have market implications. However, these turbines are operating on public lands and were in part publicly funded. Output data and other performance metrics clearly have policy implications.
Note that Iberdrola “expect[s] no impact from new federal budget legislation, as it doesn’t impact 1,000 megawatts under construction.”
An MV Times photo of a Vineyard Wind substation is pasted below. These substations are large structures. Per the Construction and Operations Plan (COP) for Vineyard Wind, the topsides for a conventional electrical service platform (ESP) (also known as an offshore substation or OSS) are 45 x 70 x 38 m, which is larger in surface area than a typical 6-pile oil and gas platform (~30 x 30 m), and is comparable in size to a large jackup drilling rig.
Bud's Offshore Energy (BOE) 