Ørsted posts fat profit, shrugs off coronavirus, eyes more PPAs

Ørsted's Race Bank offshore wind farm
Ørsted’s Race Bank offshore wind farm

Danish energy company Ørsted increased operating profit 33 per cent in the first quarter, with wind driving earnings.

The firm flagged risk of short-term delay to US offshore wind construction projects due to coronavirus, but said there is “no indication that the Covid-19 situation will significantly impact our full year earnings”.

Ørsted CFO, Marianne Wiinholt

CFO Marianne Wiinholt said the company anticipates little medium-term coronavirus impact on its build out plans, and expects to hit its 15GW target for offshore wind by 2025.

As its power is almost fully hedged for 2020 and 2021, she added that recent power price volatility should have little near term impact.

The company also shrugged off suggestions that demand destruction and falling energy prices will hurt the clean energy transition.

Ørsted sees “huge growth” overall in renewables, said Wiinholt. “Whether growth is reduced a little bit, I don’t think it will make a big difference for us.”

More PPAs

Despite global lockdowns, Ørsted has managed to seal another major corporate power purchase agreement (PPA).

This week it announced a 15-year deal with Nestle UK, with the FMCG giant buying the output of 31MW of the 573MW Race Bank offshore wind farm.

From May, Nestle will offtake 125GWh per annum, half of its UK power consumption, in what is Ørsted’s largest long-term, fixed price PPA to date in the UK. It tops the 100GWh per annum deal Ørsted struck with Northumbrian Water in 2019, also via Race Bank.

Wiinholt said the company expects to sign more corporate PPAs in the year ahead, despite coronavirus uncertainty.

“We see interest in these PPAs. There is demand for them in Europe and we see that demand picking up,” she said.

Green hydrogen

Meanwhile, the company hopes to use some of the power from its Hornsea 2 offshore wind farm to produce green hydrogen via electrolysis for the Gigastack project, where it is working with partners including ITM Power, Phillips 66 and Element Energy.

Wiinholt said Ørsted views hydrogen investments as “very interesting”, with funding now secured for a project in Denmark alongside the Gigastack scheme. She said Ørsted, which has set up a standalone hydrogen unit, is also pursuing projects in Germany and the Netherlands.

“We see all [geographic] markets as very interesting [for hydrogen],” said Wiinholt. “It makes sense to have activity close to offshore wind farms, as we see them as a very good source to deliver that energy.”

See the results here.

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Northumbrian Water signs major offshore wind PPA with Ørsted

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