Danish energy giant Ørsted faces a crisis as U.S. regulators halt construction of a major offshore wind project, pushing the stock to an all-time low and prompting heated debate in Denmark over the state’s financial backing of the company.
Ørsted’s U.S. Project Halted by Authorities
Denmark’s renewable energy flagship, Ørsted, is facing a serious financial and reputational crisis after American authorities abruptly ordered the company to halt all construction on one of its key offshore wind farm developments, Revolution Wind, located off the coast of Rhode Island. This is a big concern for Ørsted and the investors.
The decision, issued on Friday by the U.S. Department of the Interior through its Bureau of Ocean Energy Management (BOEM), comes as a significant blow to Ørsted’s U.S. ambitions. It follows a similar stoppage faced by Norwegian energy company Equinor earlier this year. No reason for the order has been publicly provided, and neither U.S. authorities nor Ørsted’s American partner, Skyborn Renewables, has offered further comment. It is not clear why the Danish energy project was stopped or when it will start again.
Stock Price Crash and Investor Panic
The fallout on financial markets has been swift. On Monday, Ørsted’s stock closed at 179.10 Danish kroner—a decline of 16.35%, its lowest level since the company’s IPO more than nine years ago. The sharp drop erases substantial shareholder value and highlights the company’s vulnerable position.
In the past two weeks alone, Ørsted stock has declined over 45%, including a single-day drop of 29% following the announcement that the company would seek an emergency capital injection.
Need for Capital Injection Sparks Debate
To stabilize its financial position, Ørsted is pursuing a 60 billion Danish kroner (approximately $8.8 billion) capital raise through a stock issuance. The Danish state, which owns just over 50% of Ørsted, has pledged to purchase new shares worth 30 billion kroner to maintain its ownership stake.
However, the decision has ignited political divisions in Denmark. Multiple parties, including the Conservatives, the Danish People’s Party, and the Denmark Democrats, question whether taxpayers should cover Ørsted’s risks in foreign green energy projects. Critics argue that Ørsted’s heavy U.S. focus no longer aligns with its role as a national Danish energy asset.
Confidence Among Private Investors Shaken
Private shareholders are also feeling the pressure. Some have suffered losses of up to 60% on their Ørsted shares but still remain hopeful. Many small investors cite their belief in green energy’s long-term potential as a reason for holding onto the stock despite massive short-term volatility.
Saxo Bank noted that Ørsted was the most traded stock on the Danish energy market on Monday, with 80% of transactions involving buy orders. This indicates that while some are panicking, others see the drop as a buying opportunity.
Political Risk and the Trump Factor
Adding another layer of complexity is the re-emergence of Donald Trump on the U.S. political scene. Known for his strong opposition to wind energy, especially offshore farms, Trump is perceived by investors as a wildcard who could significantly hinder green infrastructure projects during a possible second term.
Market analysts suggest that the latest decision from U.S. authorities could indicate a political motive, especially given Trump’s previous actions against other offshore wind projects like Equinor’s Empire Wind.
One investment director called the situation “political risk on steroids,” lamenting that such unpredictability makes it extremely difficult for institutional investors to assess future conditions in the U.S. offshore wind market.
Financial Consequences and Strategic Uncertainty
Every month of delay in the Revolution Wind project could cost Ørsted approximately 1 billion kroner, according to financial analysts. There are also concerns that the fate of Sunrise Wind, another major Ørsted project in the U.S., could be tied to the current crisis.
Should the stoppage become permanent, Danish energy company, Ørsted may be forced to write down several billion kroner in assets, and the need for fresh capital could exceed the planned 60 billion kroner raise.
Meanwhile, Equinor, which owns 10% of Ørsted, has offered to share its experiences in navigating U.S. policy reversals, hoping to assist in the project’s restart.
Uncertain Path Forward
While Ørsted assures investors it is working with its U.S. partner to assess options for resuming construction, financial markets remain skeptical. Analysts warn that unless litigation or political efforts overturn the current stoppage order, Ørsted’s financial foundation could further erode.
For now, the Danish energy company stands at a crossroads, facing skepticism at home and resistance abroad—a painful reminder of how delicate the global green transition can be when met with shifting political winds.
