Orsted quits Norwegian offshore wind projects due to rising costs

(Bloomberg) – Orsted A/S has withdrawn from a partnership developing offshore wind projects in Norway as the company grapples with big losses resulting from rising costs.

Orsted quit a consortium with Fred. Olsen Renewables AS and Hafslund Eco citing “a prioritization of investments” in its portfolio, according to the company. The pullback is a further sign of how the world’s largest developer of wind farms is scaling back after being forced to cut some U.S. projects, which resulted in a third-quarter net loss.

Orsted is at the center of a crisis for the offshore wind industry with companies struggling to fund large developments. Higher financing and component costs combined with increased competition have slowed the pace of renewable energy around the world, making it harder for developers and suppliers to make new projects profitable.

“We are carefully prioritizing our investments and therefore adjusting business development and bidding activities, particularly in some of our new markets,” Alana Kuhne, vice president and head of new markets in Europe at Orsted, said in an emailed statement. “As part of this we have decided not to prioritize offshore wind development in Norway for now and will therefore not to be participating in the upcoming tenders.”

Shares in Orsted fell as much as 2.8% on Monday and are near the lowest for six years after the Danish utility dropped two US wind projects and recorded 28.4 billion kroner ($4 billion) in impairments earlier this month.

Hafslund and Fred. Olsen Seawind will continue their partnership with a view to pursuing the Utsira Nord project specifically and offshore wind in Norway generally, according to a statement by Bonheur ASA.