Posted on September 20, 2023
Danish renewables company Ørsted is known as an offshore wind pioneer, and it has more installed generating capacity in the segment than any other company in the world. It has an ambitious project pipeline in the United States, where it hopes to install gigawatts of capacity off New Jersey and New York. But as inflation and interest rate hikes bite into its projected margins, it has warned that it may have to delay or walk away from some of these multibillion-dollar projects – and judging by its recent announcements, some of its capital will be going into onshore solar instead.
Over the course of the past week, as Ørsted detailed its plans to pull back on U.S. offshore wind, the company announced plans to enter two new solar power projects with a combined capacity of more than 1.1 GW. This is the same nominal amount of power-generating capacity as Ørsted’s proposed 1.1 GW Ocean Wind 1 project off New Jersey, which the company recently delayed until 2026.
The two solar projects are both on the other side of the Atlantic. In Ireland, Ørsted has just announced a partnership with Terra Solar to develop another 400 MW worth of solar power capacity, adding to two projects that the Danish firm has already purchased from Terra. “Solar energy is an essential component for enabling the Irish power system to run entirely on green energy,” said TJ Hunter, senior director of development and operations in the UK and Ireland at Ørsted. “We need to grow solar energy in parallel with onshore wind, offshore wind, and energy storage.”
Last week, Ørsted announced an agreement to buy into a 740 MW solar farm development in Nottinghamshire, UK. The “One Earth Solar Farm” project is big enough to qualify as a Nationally Significant Infrastructure Project, which allows it to take advantage of streamlined permitting processes. It will be Ørsted’s first solar farm in the UK, and the firm will be buying it in phases as it progresses through construction.
Taken on its own, One Earth Solar Farm outstrips Ørsted’s 700 MW portfolio of operating solar PV. The two projects represent a substantial increase in the size of its solar division, and arrive just as the firm signals readiness to pull back from its U.S. offshore wind operations.
Ørsted isn’t just slowing down its offshore wind ambitions in the American market. It also refrained from bidding on any new offshore wind projects in the latest round of UK renewable energy price support auctions. Developers have warned that the UK Contracts for Difference (CfD) system’s existing terms are not generous enough to keep up with interest rates and supply chain costs; when the sealed bids were opened on September 7, it was revealed that not one interested party had entered the latest auction in the offshore wind segment. (The solar segment was well-subscribed.)