Ørsted Posts Record Profit In 2018

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Danish energy group Ørsted has posted record profits in 2018 as it blew away 2017 figures and significantly exceeded its own expectations as it sets its sights a target of 99% green energy generation by 2025.

Ørsted posted its 2018 Annual Report at the end of January, revealing that it had achieved an all-time high operational profit (EBITDA) of DKK30 billion ($4.59 billion) for the year, up an impressive 33% compared to its 2017 figures. EBITDA without new partnerships increased by 18% to DKK15 billion ($2.30 billion) for the year, significantly exceeding the company’s expectations set at the beginning of the year and even the company’s most recent guidance of somewhere in the range of DKK13-14 billion.

The company’s growth was due primarily to higher achieved Renewable Obligation Certificates (ROC) recycle values, lower than expected costs, and better than expected progress on the 450 megawatt (MW) Borkum Riffgrund 2 offshore wind farm in Germany, resulting in higher partnership gains and faster ramp-up of generation.

Company earnings from offshore wind farms in operations increased by 29% to DKK11 billion in 2018 due primarily to ramp-up at the Walney Extension, Race Bank, and Borkum Riffgrund 2 offshore wind farms. Ørsted also completed the farm-down of the 1,218 MW Hornsea 1 offshore wind farm in the United Kingdom, one of the largest ever renewable energy merger & acquisition (M&A) transactions, yielding a total EBITDA of DKK15.1 billion in 218.

Net profit amounted to DKK19.5 billion in 2018, the company’s best ever, with an increase of DKK6.2 billion over 2017’s figure.

“2018 was a great year for Ørsted,” crowed CEO and President Henrik Poulsen in the company’s annual report. “We delivered our best financial result ever and continued our deployment of green energy, reaching 75% green energy in our heat and power generation. On a global scale, renewable energy will grow rapidly in the years to come. We are well positioned to take part in this significant growth.

“By the end of 2018, our portfolio consisted of 12 GW of offshore and onshore wind farms and biomass-fired combined heat and power plants that are either in production, under construction or have obtained final investment decision (FID). Furthermore, we have projects with a capacity of 4.8 GW for which we have been awarded the construction concessions or entered into offtake agreements, but are yet to make FID. In addition, we have a strong pipeline of projects under development. Towards 2030, it is our strategic ambition to reach an installed capacity of more than 30 GW renewable energy, provided that the build-out creates value for our shareholders. Contributing to this ambition, we raised our 2025 ambition for offshore wind from 11-12 GW to 15 GW.”

Looking forward, Ørsted expects 2019 EBITDA to amount to in the range of DKK15.5 to DKK16.5 billion compared with DKK15 billion in 2018 (excluding new partnership agreements) representing an increase of between 4% to 10%. Gross investments for 2019 are expected to amount to between DKK21 and DKK23 billion, reflecting what the company hopes will be a high level of offshore and onshore wind activity.

The company also published its Sustainability Report in which it outlined a target of generating 99% energy from renewable sources, up from 75% today. Further, the carbon intensity of the company’s energy generation was reduced by 72% in 2018 as compared with 2006 levels.

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Joshua S Hill

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