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Ørsted: The Greatest Corporate Energy Transformation in History
How Denmark's Coal-Burning "Dirty Secret" Became the World's Leading Offshore Wind Company
In December 2009, foreign journalists descended on Copenhagen for COP15, the United Nations Climate Change Conference. They expected to find a progressive Nordic nation leading the charge against global warming. What they discovered instead was Denmark's dirty little secret: the company largely responsible for the literal black cloud over Denmark—DONG Energy—was controlled by the state. DONG, which stood for Danish Oil and Natural Gas, emitted fully one-third of the country's carbon dioxide emissions. The irony was almost unbearable. The host of the conference whose goal was to lay out a plan to wean the world off fossil fuels was itself utterly shackled to the grubby old world of oil, natural gas, and coal.
Fifteen years later, that same company—renamed Ørsted after the 19th-century Danish physicist who discovered electromagnetism—is the market leader in offshore wind, with a 30% market share of installed capacity. In 2009, 85% of Ørsted's energy production came from fossil fuels, but over the last 15 years the company has transformed itself into a leader in renewables. Having already divested its oil and gas business in 2017, Ørsted shut down its last coal-fired power plant in 2024.
This is the story of perhaps the most dramatic corporate transformation in the history of the energy industry—and a cautionary tale about what happens when that transformation meets the brutal realities of macroeconomic headwinds and political volatility.
I. Origins: The Oil Crisis and Denmark's Energy Awakening (1972–2005)
The Birth of an Energy Giant
Picture Denmark in 1972. The small Scandinavian nation, wedged between the North Sea and the Baltic, was almost entirely dependent on imported oil for its energy needs. Then came the OPEC oil embargo of 1973, which sent shockwaves through every economy dependent on Middle Eastern petroleum.
The Danish government responded with a bold move: the Danish government owned 76% of DONG Energy, founded in 1972 to exploit the newly discovered North Sea gas and oil deposits. The company's original mission was straightforward—find oil and gas in Danish waters, whose riches would soon put Britain and Norway on the global energy map.
But Denmark's energy ambitions went beyond oil extraction. Over the following decades, DONG transformed into a vertically integrated energy behemoth, acquiring coal-fired power plants and establishing itself as the dominant force in Danish energy. In 2012 the company came under intense financial pressure due to a number of factors in the European energy markets. Operating profit dropped by almost 40% and credit metrics deteriorated rapidly.
The company spent the 1970s and 1980s building what executives proudly called one of the most efficient power generation systems in Europe. Engineers developed combined heat and power plants that captured waste heat for district heating—a genuinely innovative approach that nonetheless ran on coal, the dirtiest fossil fuel of all.
The Hidden Asset: Denmark's Wind Heritage
What most observers missed during DONG's coal-burning heyday was a quiet revolution happening on the North Sea. Horns Rev 1, the first large-scale offshore wind farm in the world, was built by Danish energy company Elsam (later DONG, now Ørsted). Its capacity of 160 MW was four times that of any previous offshore installation.
When the first phase was inaugurated in 2002, Horns Rev wind farm was the first large scale offshore wind farm in the world at 160 MW, four times larger than the previous largest offshore wind farm in the world, the Middelgrunden at 40MW.
The significance of Horns Rev cannot be overstated. Horns Rev 1 pioneered several technologies, including monopile foundations and converters on the rotor of the generator, which are now industry standards. The success of Horns Rev 1 has led to significant growth in the offshore wind sector, with over 60 GW of offshore wind capacity installed worldwide as of 2023.
This Danish wind heritage would prove crucial when DONG later sought to reinvent itself. When DONG Energy was formed in a merger in 2006, our portfolio included the world's very first offshore wind farm, Vindeby, built in Denmark in 1991.
The offshore wind expertise sitting inside DONG was like a winning lottery ticket stuffed in a drawer and forgotten. Engineers understood something that would take the rest of the world another decade to fully appreciate: wind turbines at sea could be massive, efficient, and—given enough scale—economically competitive.
II. The Mega-Merger and Expansion (2005–2008)
Creating DONG Energy
The mid-2000s marked a period of aggressive consolidation in European utilities. DONG was not content to remain a relatively small national oil and gas company. Management had bigger ambitions.
Fortunately, when Danish Oil and Natural Gas—better known as Dong Energy—changed its name in November 2017 to reflect the company's shift towards renewable energy, CEO Henrik Poulsen had already done most of the hard work. Poulsen agreed to sell all of the company's oil and gas assets to UK petrochemicals firm Ineos for $1.05bn in May 2017, having pledged to phase out coal-fired power generation by 2023 earlier in the year. Dong Energy already held the title of the world's largest offshore wind producer, operating more than a quarter of the wind farms dotted throughout the planet.
But before the transformation, there was expansion into fossil fuels. The merged DONG Energy was now a true energy conglomerate, but one heavily weighted toward the old energy economy. The company owned coal plants across Scandinavia, operated oil and gas platforms in the North Sea, and maintained long-term gas supply contracts with some questionable partners.
The Gazprom Deal and Geopolitical Entanglements
In 2006, DONG entered into one of the most controversial business arrangements in its history. The company signed a 20-year contract with Gazprom, Russia's state-controlled gas giant, for delivery of one billion cubic meters of natural gas annually starting in 2011 through Nord Stream 1. The deal was criticized in European policy circles as potentially damaging to European energy security—criticism that would prove prescient when Russia invaded Ukraine decades later.
The Failed Coal Plant and Aborted IPO
In 2007, DONG was planning what seemed like the next logical step for a growing energy company: a massive coal plant in Germany called Lubmin, capable of generating 1,600 megawatts. Executives envisioned pitching the company to investors as a fossil fuel giant in the making.
Then came 2008.
The global financial crisis didn't just halt DONG's IPO plans—it forced executives to pause and reconsider everything. The Lubmin coal plant never got built. And in that moment of forced introspection, something remarkable happened: management began to question whether the fossil fuel path was truly the right one.
For DONG, the failed IPO was what venture capitalists might call a "fortunate failure." The company was forced to rethink its strategy at precisely the moment when renewable energy economics were beginning to shift. Had the IPO succeeded, had Lubmin been built, the company might never have made its historic pivot.
III. The Strategic Pivot: 85/15 Vision (2008–2012)
The Vision is Born
In 2008, we defined the vision to transform our company from fossil fuels to green energy, and in 2009, we set the target of reversing the ratio of fossil fuels to renewables in our heat and power mix, so that our energy production would be 85% renewable by 2040. We achieved it in 2019, a full 21 years ahead of schedule.
Think about what this meant. In 2008, a 2009 vision statement set out the clear intention to transform Ørsted from black to green energy in 30 years. To flip the then position of 85% black and 15% green energy to 85% green and 15% black by 2040.
This wasn't a modest goal. This was a state-owned company, one that employed thousands of engineers who had spent their careers perfecting coal combustion technology, announcing that it would essentially replace its entire core business within a generation.
Internal Resistance and Strategic Logic
The announcement did not go over well with everyone. DONG had a reputation among engineers as the builder of the world's most efficient coal plants. These weren't people who wanted to hear that their life's work was being phased out.
The strategic logic, however, was compelling. The executives who championed the pivot made a simple but profound observation: if the world is going to transform to renewable energy, you would want something which is scalable, which you can build at a large scale.
One thing that used to make offshore wind so expensive was the lack of infrastructure or any economy of scale. In 2009, we took the decisive step of placing a bulk order for 500 3.6 MW wind turbines from Siemens—more wind turbines than were in operation offshore in the entire world at that point, and enough to secure a strategic supply chain for the more cost-effective construction of a number of new offshore wind farms.
This bulk order was audacious. There were literally more turbines in that single contract than existed in all the world's offshore wind farms combined. But it achieved something crucial: it gave Siemens the certainty it needed to invest in manufacturing capacity, and it gave DONG guaranteed supply at favorable prices.
The company was essentially betting that it could ride the learning curve down—that by building offshore wind farms at unprecedented scale, it could drive down costs to the point where the technology became genuinely competitive with fossil fuels. It was a bet that would take years to validate, and it required management to convince skeptical investors and politicians that they weren't simply burning money on green vanity projects.
IV. Crisis, Goldman Sachs, and the Political Firestorm (2012–2016)
The Gas Price Collapse
Just as DONG was committing billions to its renewable transformation, global energy markets turned against the company. The state-owned utility asked the government for help in 2013 after it lost money on failed bets on natural gas contracts.
The company's credit rating was downgraded. The outlook was grim. DONG needed capital—and fast.
Enter Henrik Poulsen
Henrik Poulsen recognised Ørsted's potential to be a leader in the renewable energy space from the day he joined the company in 2012.
Henrik is best known for his transformative leadership as CEO of Ørsted A/S (2012-2020), where he led the company from a fossil-fuel utility into the world's leading offshore wind champion. Under his stewardship, offshore capacity more than doubled, legacy oil and gas assets were divested, and the brand was entirely repositioned.
Poulsen's background was unusual for an energy CEO. Earlier, he was CEO of TDC A/S (2008-2012), Denmark's largest telecoms operator which at that time was owned by five private equity firms including KKR, and an Operating Executive at KKR Capstone (2007-2008). His career also includes leadership roles at LEGO (1999-2006) and early consulting work at McKinsey.
What Poulsen brought was not deep technical knowledge of power generation, but rather a strategic clarity and operational discipline honed in the crucible of private equity turnarounds. He looked at DONG and saw not a troubled utility but an opportunity for fundamental transformation.
Henrik Poulsen told Harvard Business Review: "We saw the need to create a brand new company. It had to be a radical transformation, because we had to build a new core business and find new areas of sustainable growth. During the transition, we saw an opportunity to help fight climate change, and we became one of the first companies to make a wholehearted, fundamental decision to move from reliance on fossil fuels to green energy."
The Goldman Sachs Deal: Political Dynamite
To fund the offshore wind expansion, DONG needed capital that the Danish government was unwilling to provide directly. The solution was to bring in outside investors.
The deal allows a group of investors headed by Goldman Sachs to buy an 18 percent stake of Dong Energy for $1.5 billion, as part of a broader restructuring that will cut the utility's costs, reduce debt and increase energy investments.
The sale proved especially divisive because of a provision that would give Goldman Sachs veto powers in key areas like management changes. It was opposed by 68 percent of Danes in a recent poll, and thousands of protesters assembled outside the Danish parliament building.
In an unprecedented move, Denmark agreed to sell 19 percent of its state owned energy company, DONG Energy, to U.S. investment giant Goldman Sachs—a decision so unpopular it caused Denmark's governing Socialist People's Party to quit the coalition government. The purchase gives board positions and veto power to Goldman Sachs on important, strategic energy decisions for the country. The news set off a storm of protest this week in Denmark. Around 190,000 people have already signed a petition rejecting the state energy company's sale to the Wall Street firm.
Danish Prime Minister Helle Thorning-Schmidt scraped together votes Thursday to partially privatize the country's state-owned energy company, but the controversial deal has fractured her governing coalition. The dispute over the deal prompted the Socialist People's Party to quit the prime minister's center-left coalition. "It has been a dramatic 24 hours," Socialist Party leader Annette Vilhelmsen said as she made the announcement.
Former Prime Minister Poul Nyrup Rasmussen was scathing in his criticism: "This is a giant, historical mistake. If the Danish government must make a deal with a group of lawyers from Goldman Sachs, you have to come completely and extremely well prepared. These people are used to eating small countries for breakfast."
The Vindication
There were two primary causes: the firing of the CEO in 2012 in circumstances which had a ripple effect in corporate Denmark, and a large capital injection from Goldman Sachs which caused a political backlash as the company was then more than 80% owned by the Danish state. The perception grew that Goldman Sachs was plundering the Danish state as the company stake had been sold too cheaply. This was untrue but very difficult to counteract in the public debate. For four years, there was near constant crisis management while trying to implement the green transformation.
But Goldman's bet paid off spectacularly. Goldman Sachs bought 19 percent of Dong for eight billion kroner ($1.2 billion) and has since sold large amounts of its shares for a huge profit. Calculations based on share values estimate the investment bank to have earned 11.7 billion kroner ($1.7billion) on its investment in Dong Energy—a 150 percent value increase in three years and three months.
What critics missed at the time was that the Goldman investment came with something far more valuable than money: credibility. The fact that the most sophisticated financial investors on Wall Street were willing to bet on DONG's renewable transformation sent a powerful signal to other investors that this was not just green virtue-signaling but a serious business strategy.
V. The IPO and Complete Transformation (2016–2020)
Denmark's Largest IPO
On June 9, 2016, DONG Energy went public on the Copenhagen Stock Exchange in what became Denmark's largest-ever initial public offering. Now, two years after the muddy affair, the energy company has been announced on the stock market and suddenly Dong Energy is valued at $15 billion.
Danish company Orsted was named Dong Energy until the sale of all its oil and gas fields to Ineos in 2017, soon after the May 2016 initial public offering.
The IPO was a vindication of Poulsen's strategy. Investors weren't buying a troubled fossil fuel utility—they were buying the world's largest offshore wind developer, with a clear path to growth.
Divesting the Fossil Fuel Past
With the IPO complete, DONG accelerated its divestment program. In May 2017, Poulsen agreed to sell all of the company's oil and gas assets to UK petrochemicals firm Ineos for $1.05bn, having pledged to phase out coal-fired power generation by 2023 earlier in the year.
The Name Change: From DONG to Ørsted
With the oil and gas business sold, the company faced a branding problem. "DONG" stood for "Danish Oil and Natural Gas"—a name that now had nothing to do with the company's actual business. The company needed a new identity.
The company Danish Oil and Natural Gas (DONG), was renamed Ørsted to signal its transition from fossil fuels to becoming one the world's leading developers and operators of offshore windfarms.
The choice of name was deliberate and symbolic. Hans Christian Ørsted (born August 14, 1777, Rudkøbing, Denmark—died March 9, 1851, Copenhagen) was a Danish physicist and chemist who discovered that electric current in a wire can deflect a magnetized compass needle, a phenomenon the importance of which was rapidly recognized and which inspired the development of electromagnetic theory.
Hans Christian Ørsted was a Danish chemist and physicist who discovered that electric currents create magnetic fields. This phenomenon is known as Oersted's law.
By naming itself after the scientist who laid the foundation for the modern generation of electricity, Ørsted was making a statement: this was a company built on innovation, on the Danish tradition of scientific leadership, on the electricity that would power the 21st century.
Achieving the Vision 21 Years Early
The results were stunning. We achieved it in 2019, a full 21 years ahead of schedule.
By 2019, Ørsted had flipped its energy mix from 85% fossil fuels to 85% renewables. The company had not just met its 2040 target—it had beaten it by two decades.
VI. Global Expansion and the US Bet (2018–2022)
US Market Entry: The Deepwater Wind Acquisition
With its European business firmly established, Ørsted turned its attention to the potentially enormous US offshore wind market. Ørsted has entered into an agreement with the D.E. Shaw Group to acquire a 100% equity interest in Rhode Island-based Deepwater Wind at a purchase price of USD 510 million.
The two companies' offshore wind assets and organizations will be merged into the leading US offshore wind platform with the most comprehensive geographic coverage and the largest pipeline of development capacity. Deepwater Wind, the leading US offshore wind developer, has built an attractive and geographically diverse portfolio of projects along the US East Coast.
Deepwater Wind's portfolio has a total potential capacity of approx. 3.3GW comprising: Block Island (30MW), the only operational offshore wind farm in the U.S. Block Island comprises five General Electric 6MW turbines with a total capacity of 30MW. The Block Island wind farm, located three miles from Block Island, Rhode Island, came into operation in December 2016.
The new company launches as the clear leader in the US market, with the most comprehensive geographic coverage and the largest pipeline of development capacity, totaling over 8GW.
Taiwan: The Asia-Pacific Beachhead
Ørsted's expansion wasn't limited to the US. Taiwan, with its ambitious renewable energy targets, became a key market in Asia-Pacific.
With a total installed capacity of 900 MW, the project is in operation and fully connected to the grid, making it the largest in Taiwan and the Asia-Pacific region.
Greater Changhua 2b and 4 is Ørsted's second gigawatt-size offshore wind project in Taiwan, following the 900 MW Greater Changhua 1 and 2a offshore wind farms that came into operation in April 2024.
Being built 35-60 kilometres off the coast of Changhua County, the 924 MW Greater Changhua 2b & 4 includes two offshore wind sites that will together comprise 66 Siemens Gamesa 14-236 14 MW wind turbines. Once fully operational, Greater Changhua 2b and 4 will supply renewable electricity to Taiwan Semiconductor Manufacturing Company Limited (TSMC) under a corporate power purchase agreement (CPPA) signed in 2020. The 924 MW offshore wind farm is scheduled to be fully commissioned in 2026.
The TSMC deal is particularly significant. TSMC is the world's most important semiconductor manufacturer, and its commitment to purchasing Ørsted's renewable power demonstrates how corporate sustainability commitments are creating new demand drivers for offshore wind.
The UK: Building the World's Largest Wind Farms
In the UK, Ørsted has built a dominant position in offshore wind. We currently operate 12 offshore wind farms in the UK. With a total capacity of 5.6 GW, our wind farms generate enough green energy to power almost 6 million UK homes a year.
Hornsea 2 is the largest offshore wind farm in the world. With 165 sea wind turbines, it powers over 1.4 million UK homes with green energy.
Now we're delivering the world's single largest offshore wind farm. Hornsea 3 will have a generating capacity of 2.9 GW—enough green energy to power more than 3 million UK homes.
Ørsted has taken final investment decision (FID) on the world's single largest offshore wind farm, Hornsea 3, which will have a capacity of 2.9 GW and is expected to be completed around the end of 2027.
VII. The US Nightmare: When Transformation Meets Reality (2023–2025)
The Ocean Wind Cancellation
In late 2023, Ørsted's US expansion came to a dramatic halt. "We are extremely disappointed to announce that we are ceasing the development of Ocean Wind 1 and 2. We firmly believe the US needs offshore wind to achieve its carbon emissions reduction ambition, and we remain committed to the US renewables market. However, the significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision."
The total impairments recognised in the interim financial report for the first nine months of 2023 amount to DKK 28.4 billion, and the majority of these (DKK 19.9 billion) relate to Ocean Wind 1.
Wind giant Ørsted cited rising interest rates, high inflation, and supply chain bottlenecks in late October when it canceled its highly anticipated Ocean Wind 1 and Ocean Wind 2 projects. The two projects would have supplied just over 2.2 gigawatts to the New Jersey grid—enough energy to power over a million homes.
The Perfect Storm of Challenges
The US offshore wind market proved far more treacherous than anyone anticipated. Getting offshore wind projects permitted and approved in the U.S. takes years and is fraught with uncertainty for developers, more so than in Europe or Asia. Before a company bids on a U.S. project, the developer must plan the procurement of the entire wind farm. The bid must also be cost-competitive, so companies have a tendency to bid low and not anticipate unexpected costs, which adds to financial uncertainty and risk. The winning U.S. bidder then purchases an expensive ocean lease, costing in the hundreds of millions of dollars.
One of the reasons Ørsted gave for canceling its New Jersey project was a lack of these vessels. The troubles have been complicated by a single century-old law, which mandates that only ships built and operated by the US can operate from US ports.
The Jones Act—a protectionist law from 1920—created a fundamental bottleneck. Europe has spent decades building a fleet of specialized offshore wind installation vessels. The US has virtually none that qualify under the Jones Act, forcing developers to use awkward workarounds that add time and cost.
Danish renewable energy developer Ørsted will pay New Jersey USD 125 million (approximately EUR 115 million) to settle claims over the company's cancellation of two offshore wind farm projects, Ocean Wind 1 and Ocean Wind 2.
The Continuing US Struggles and CEO Departure
Ørsted has reported impairment losses of DKK 12.1 billion (approximately EUR 1.62 billion) for the fourth quarter of 2024, citing rising costs for its offshore wind business in the US, mostly related to the development of the 924 MW Sunrise Wind project off the coast of New York. The Danish offshore wind developer said that the financial strain was caused by several factors, including rising interest rates, a decline in the value of its seabed leases in the US, and increased costs associated with the construction of the Sunrise Wind offshore wind farm.
The Sunrise Wind project is progressing on a tight construction schedule and is navigating challenges related to supply chain and construction. The project follows on from Revolution Wind, which is currently under construction, including offshore installation work. Implementing learnings from Revolution Wind, such as the wind turbine installation rate, has led to a reassessment of the Sunrise Wind project to include schedule delays and increased costs.
These continued struggles ultimately cost CEO Mads Nipper his job. Mads Nipper will step down as CEO and group president of Ørsted on 1 February 2025. The Danish renewables group's board of directors has appointed Rasmus Errboe, currently serving as deputy CEO and chief commercial officer, to replace Nipper.
"The renewable energy market has fundamentally changed since January 2021. The impacts on our business of the increasingly challenging situation in the offshore wind industry, ranging from supply chain bottlenecks, interest rate increases, to a changing regulatory landscape, mean that our focus has shifted."
Morningstar senior equity analyst Tancrede Fulop said: "The chairman of the board of directors vindicates Mads Nipper's departure by the fundamental changes in the renewables space, including supply chain bottlenecks and interest rate increases. Those changes certainly played a key role in the 80% drop in Ørsted shares since January 2021."
The Trump Administration and Regulatory Uncertainty
The political environment turned even more hostile in 2025. Since returning to office, the Trump administration has halted new federal leases and permits and ordered work stopped on projects already under construction, moves that put billions of dollars in investment at risk. By September, Interior Secretary Doug Burgum declared that, under current policy, there is no future for offshore wind in the United States.
President Donald Trump's "One Big Beautiful Bill Act" (OBBB Act), signed on 4 July 2025, contains a reversal of some US clean energy policy, dismantling key Inflation Reduction Act incentives and accelerating support for fossil fuels.
VIII. The Rights Issue and Strategic Retrenchment (2025)
The €8 Billion Lifeline
With its US operations under pressure and unable to divest assets as planned, Ørsted turned to its shareholders for capital. We have significantly strengthened our capital structure with the completion of the rights issue, amounting to DKK 60 billion in gross proceeds.
Ørsted will raise DKK 60 billion through a fully underwritten rights issue, with pre-emptive rights for existing shareholders. The Danish state has confirmed it will subscribe to its 50.1% share. The capital increase follows the company's decision to halt the planned partial divestment of the Sunrise Wind project in the USA after market conditions made it impossible to secure financing on acceptable terms.
Without the partial divestment of Sunrise Wind and the associated project financing, Ørsted needs to fund the construction of the entire 924 MW offshore wind project on its balance sheet, which requires an incremental funding of approximately DKK 40 billion (around EUR 5.4 billion). The remainder will be used "to support a robust capital structure".
Existing shareholders were offered new shares at DKK 66.60 (EUR 8.92) each. The demand for shares not taken up via the rights issue was "extraordinarily high," according to the developer's announcement of the Rights Issue results.
Workforce Reductions and Strategic Refocus
We announced an adjustment of our organisation through a reduction of approx. 2,000 positions towards the end of 2027. This is necessary as it increases our competitiveness and is a natural consequence of our strategic focus on offshore wind in Europe and the completion of our construction portfolio during 2026 and 2027.
As planned, we have divested a 50 % equity stake of our 2.9 GW Hornsea 3 Offshore Wind Farm in the UK, which supports a further strengthening of our capital structure.
Current Operations and Financial Position
Backed by more than 30 years of experience in offshore wind, Ørsted has 10.2 GW of installed offshore capacity and 8.1 GW under construction. Ørsted's total installed renewable energy capacity spanning Europe, Asia Pacific and North America exceeds 18 GW across a portfolio that also includes onshore wind, solar power, energy storage, bioenergy plants, and energy trading.
Operating profit (EBITDA) for 2024 amounted to DKK 32.0 billion compared to DKK 18.7 billion in 2023, of which DKK 7.3 billion related to a net reversal of provisions for cancelled projects.
In 2024, the group's revenue was DKK 71.0 billion (EUR 9.5 billion).
IX. The Competitive Landscape and Strategic Analysis
The Major Competitors
The largest offshore wind farm companies driving this momentum include Ørsted, Iberdrola, RWE, Equinor, and SSE Renewables, along with fast-advancing Chinese developers such as CTG and SPIC.
Six companies stand out in European offshore wind. Market leader Ørsted along with RWE, Iberdrola, Vattenfall, SSE and Equinor are driving unprecedented growth in the world's most advanced offshore wind markets. Based on current commercial portfolios, this diverse group of companies will account for around 40% of capacity in Europe's established offshore wind markets through to at least the mid-2020s.
China stands out in an otherwise struggling landscape. The country is now the world's largest offshore wind market, accounting for nearly half of installed capacity globally. Quick development and rising competition have actually led to falling prices for some projects there.
Porter's Five Forces Analysis
Threat of New Entrants: MEDIUM-HIGH The offshore wind industry has high barriers to entry—massive capital requirements, specialized technical expertise, long permitting timelines, and established relationships with turbine manufacturers. However, major oil and gas companies like Shell, BP, and TotalEnergies are entering the market, bringing substantial capital and offshore engineering expertise.
Bargaining Power of Suppliers: HIGH The turbine supply chain is dominated by a handful of manufacturers—Siemens Gamesa, Vestas, and GE. When demand surges across multiple markets simultaneously (as happened during 2021-2023), suppliers have significant pricing power. Installation vessels represent an even tighter bottleneck.
Bargaining Power of Buyers: MEDIUM Buyers are typically governments (through auction systems) or utilities. In auction markets, buyers set the price, giving them substantial power. However, as renewable energy mandates create fixed demand requirements, buyers must procure offshore wind regardless of price.
Threat of Substitutes: LOW-MEDIUM Alternative renewable technologies (onshore wind, solar, nuclear) compete for investment. Solar has dramatically undercut wind on pure levelized cost in sunny regions. However, offshore wind offers unique advantages—high capacity factors, ability to site near coastal demand centers, and massive scale potential.
Competitive Rivalry: HIGH Competition is intense, particularly in auction markets where developers bid aggressively to win projects. Zero-subsidy bids have become common in favorable locations, squeezing margins for all participants.
Hamilton Helmer's 7 Powers Framework
Scale Economies: Ørsted has significant scale advantages. As the largest offshore wind developer, it can spread fixed costs across more projects, negotiate better terms with suppliers, and deploy standardized processes across installations. The bulk turbine order from Siemens in 2009 exemplifies this approach.
Network Effects: Limited direct network effects exist in this industry. However, Ørsted's track record creates indirect effects—developers, investors, and regulators trust companies with proven execution capabilities.
Counter-Positioning: Ørsted's early pivot to offshore wind represented classic counter-positioning. Incumbent fossil fuel utilities couldn't follow because doing so would cannibalize their existing businesses. By the time competitors recognized offshore wind's potential, Ørsted had built substantial advantages.
Switching Costs: Once a developer wins a lease and begins construction, switching costs are enormous. Governments cannot easily replace developers mid-project. However, before contract award, switching costs are minimal.
Branding: Ørsted has built strong brand equity around sustainability and technical capability. Being named "the world's most sustainable company" (which happened in 2020) provides reputational advantages in stakeholder negotiations.
Cornered Resource: Ørsted's 30+ years of offshore wind experience represents a cornered resource. This institutional knowledge—how to permit projects, manage supply chains, install in challenging conditions, operate for decades—is difficult to replicate quickly.
Process Power: The company has developed proprietary processes for driving down costs. Its ability to reduce offshore wind costs by over 60% since 2012 reflects continuous process improvement that competitors struggle to match.
X. Investment Considerations and Key Metrics
Bull Case
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First-Mover Advantage in Growing Market: The global offshore wind market is projected to grow substantially over the coming decades as countries pursue decarbonization. Ørsted's 30-year head start provides unmatched capabilities.
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European Market Stability: While the US market has proven challenging, European markets—particularly the UK, Germany, and the Netherlands—offer more stable regulatory frameworks and contracted revenue streams.
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Taiwan Success: The Greater Changhua projects demonstrate Ørsted can successfully execute in new markets, with the TSMC partnership providing blue-chip offtake certainty.
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Rights Issue Provides Runway: The successful €8 billion rights issue removes near-term funding uncertainty and provides flexibility to weather continued US market turbulence.
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Hornsea 3 Milestone: Once the current construction portfolio is fully commissioned, the projects will contribute with an annual EBITDA run rate of DKK 11 to 12 billion.
Bear Case
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US Market Uncertainty: The Trump administration's hostile stance toward offshore wind creates existential uncertainty for US projects. Regulatory reversals could strand assets and trigger further impairments.
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Interest Rate Sensitivity: Offshore wind projects are highly capital-intensive with long payback periods. Higher-for-longer interest rates compress returns and increase project costs.
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Competition Intensifying: Major oil companies are entering offshore wind, bringing massive balance sheets. Chinese developers offer aggressive pricing. The "blue ocean" strategy that served Ørsted may become a "red ocean."
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Execution Risk: "This impairment may have been the last straw for Nipper, though he wasn't responsible for the US offshore wind bets, as only Ocean Wind 2 was awarded during his tenure. The Ocean Wind 1 project, which was cancelled and led to the highest impairment, was awarded under the tenure of his predecessor, Henrik Poulsen."
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Supply Chain Constraints: The entire industry faces bottlenecks in turbines, installation vessels, and skilled labor. These constraints increase costs and delay timelines.
Myth vs. Reality Box
MYTH: Ørsted's transformation was driven purely by idealism and climate concerns. REALITY: The transformation was fundamentally a business strategy. The failed 2008 IPO and financial crisis forced management to reconsider whether coal was truly the future. The pivot to renewables was as much about finding a sustainable business model as about sustainability itself.
MYTH: Offshore wind has become "too cheap to meter." REALITY: While costs have fallen dramatically, the recent cycle of project cancellations and renegotiations shows that offshore wind economics remain challenging, especially in newer markets with undeveloped supply chains. The industry's "learning curve" appears to have hit a plateau in some regions.
MYTH: The US market failure is primarily about politics. REALITY: While the Trump administration's hostility has exacerbated problems, the US offshore wind industry was already struggling with structural challenges: the Jones Act, long permitting timelines, aggressive early bidding, and inadequate infrastructure. Politics poured gasoline on a fire that was already burning.
Key Metrics to Track
For investors following Ørsted, three KPIs matter most:
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Capacity Under Construction (GW): Currently 8.1 GW. This is the leading indicator of future earnings. Watch for additions through auction wins and final investment decisions, as well as any further project cancellations.
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EBITDA Excluding Partnerships and Cancellation Fees: In 2024, the group's operating profit excluding new partnerships and cancellation fees was DKK 24.8 billion (EUR 3.3 billion). This strips out one-time items and shows the underlying earnings power of operating assets.
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Return on Capital Employed (ROCE): Return on capital employed is expected to average around 11 percent for 2025-2027 and exceed 13 percent for 2028-2030. This measures whether Ørsted is creating value above its cost of capital—the fundamental test of whether the transformation has succeeded financially.
XI. Conclusion: A Transformation Story Still Being Written
Ørsted's journey from Denmark's coal-burning "dirty secret" to the world's leading offshore wind company stands as perhaps the most dramatic corporate transformation in energy history. In fifteen years, the company completely reinvented itself—selling its oil and gas business, shutting down its coal plants, and building a global renewable energy platform.
The transformation delivered spectacular results for investors who believed early. From a troubled state utility valued at roughly $15 billion at its 2016 IPO, the company's market capitalization soared above $80 billion at its 2021 peak. It demonstrated that a legacy energy company could make the transition to clean energy profitably.
But the story is not over, and the ending is not guaranteed. Losses were -923.00 million, -95.62% less than in 2023. Danish wind energy giant Orsted is laying off 2,000 people from its 8,000-strong workforce as it continues a major restructuring prompted by Donald Trump's unprecedented attack on the wind energy sector.
The US market that was supposed to be Ørsted's growth engine has instead become a source of billions in impairments. The regulatory and political environment has turned hostile. Supply chain constraints and rising interest rates have squeezed economics across the industry.
Ørsted's experience offers lessons for anyone attempting large-scale corporate transformation. The company succeeded because it made an early, decisive bet on a technology whose economics were improving. It brought in outside capital to fund growth. It hired leaders with transformation experience. It moved aggressively to build scale advantages. And it renamed itself to signal a complete break with the past.
But the story also illustrates the limits of corporate strategy when confronted with macroeconomic and political forces beyond any company's control. No amount of operational excellence can overcome hostile regulation, rising interest rates, and supply chain bottlenecks simultaneously.
"Ørsted has a strong foundation with unique capabilities, and I'm looking forward to taking the lead on the transformation necessary to navigate the headwinds that Ørsted and our industry currently face. Offshore wind remains crucial for the green transition, and we're deeply committed to pursuing our vision of a world that runs entirely on green energy."
The question facing investors today is whether Ørsted's advantages—its scale, expertise, project backlog, and European market position—are sufficient to weather the current storm and deliver attractive returns over the coming decade. The transformation from black to green energy is complete. The transformation from transformation darling to durable, profitable business remains a work in progress.
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