Lower wind speeds and cable problems hit first-quarter earnings at Denmark’s Orsted, sending shares in the world’s biggest offshore wind farm developer lower on Thursday.
Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at 4.9 billion Danish crowns ($799 million), missing analysts’ consensus forecast of 5.2 billion crowns.
However, Chief Executive Mads Nipper said the company’s operational performance “was good during Q1 2021 and slightly exceeded our expectations”.
Nipper took the helm in January. His predecessor, Henrik Poulsen, stepped down after leading the energy company’s transformation away from fossil fuels.
Orsted said quarterly earnings suffered from significantly lower wind speeds compared to last year, and a warranty provision of 800 million crowns made after a cable failure was discovered during an inspection campaign at the Race Bank offshore wind farm in the UK and it was determined that there was an issue with the cable protection system (CPS). The issue occurs when the CPS moves across the scour protection, abrading the CPS and, in the worst-case scenario, causing cable failure.
Investigations into the extent of the issue are ongoing, Chief Financial Officer Marianne Wiinholt told a media briefing, but added the problem was limited to ten offshore wind farms at most. They are in the United Kingdom and Continental Europe and equipped with a cable protection system Orsted no longer uses.
Orsted estimated fixing the problems could cost 3 billion crowns in total between 2021 and 2023.
The CPS design has been updated in the meantime, so the developer does not expect this issue to occur at offshore wind farms currently under construction, such as Hornsea 2 in the UK and Changhua in Taiwan.