Renewable energy company Ørsted, formerly DONG Energy, has this week announced strong financial growth for its third quarter in line with expectations, amidst news that it has divested 50% of the 659 MW Walney Extension offshore wind farm.
Ørsted announced its third-quarter earnings report on Wednesday, which revealed operating profit (EBITDA) for the company’s 9-months-to-date of DKK9.5 billion ($1.49 billion), an underlying growth of 11%. However, focusing on the third quarter, EBITDA was 43% lower than a year earlier, down to DKK1,757 million from DKK3,099 million, while total profit for the quarter was only 6% down, from DKK3,331 million to DKK3,140 million.
Earnings from the company’s operating offshore wind farms increased by 39%, driven primarily by ramp-up generation from new offshore wind farms.
The third quarter was a big one for Ørsted — which included its name change from DONG Energy. The company successfully divested itself of its oil & gas business, raking in $1.05 billion from London-based chemicals company INEOS on the sale. The company was also awarded the contract to build the 1,386 MW Hornsea Project Two, at a record UK-low strike price of £57.50 per MWh.
”The divestment of our upstream oil and gas business to INEOS was a milestone in our strategic transformation from black to green energy,” said CEO and president Henrik Poulsen.
“Our vision is to create a world that runs entirely on green energy. We expect that more than 95% of the power and heat we generate in 2023 will be green.
“The year is developing according to our expectations and today we increased our EBITDA guidance for 2017 by DKK 2bn to DKK 19-21 billion following the agreement to divest 50% of Walney Extension to PKA and PFA, two leading Danish pension funds.
“In Q3 2017, we increased generation from our offshore wind farms and at the same time we strengthened our long-term development pipeline with the world’s largest offshore wind farm Hornsea 2 with a capacity of 1.4GW, which will be completed in 2022. This will be our first offshore wind farm, which can generate power at a lower price than newly constructed coal- and gas-fired power stations. This is a major breakthrough, both for Ørsted and the green transformation.”
Announced in conjunction with the company’s third-quarter earnings report, Ørsted also revealed that it had successfully divested/farmed-down 50% of the 659 MW Walney Extension offshore wind farm to a consortium consisting of PKA and PFA, two leading Danish pension funds.
”We’re delighted to welcome two Danish pension funds as co-owners of Walney Extension,” said Poulsen. “We already have a strong partnership with PKA on three other offshore wind farms and we look forward to building an equally long-lasting relationship with PFA on what will be the world’s biggest wind farm when completed. Both partners are committed to the green energy transition and I’m pleased that our offshore wind assets continue to be attractive to institutional investors.”
The farm-down consists of divestment of a 50% ownership share in the project and the commitment to fund 50% of the payments under the EPC contract for the entire wind farm and totals approximately £2 billion ($2.66 billion) to be paid during 2017 and 2018.
In line with strong quarterly growth and the divestment of 50% of the Walney Extension, and still expecting to finalize the divestment of 50% of the Borkum Riffgrund 2, Ørsted has raised its EBITDA guidance for the full-year 2017 from DKK 17-19 billion to DKK 19-21 billion, an underlying growth of between 32% to 45%.