Equinor buys 9.8% of shares in offshore wind energy company Orsted

Nora Buli and Jacob Gronholt-Pedersen

OSLO/COPENHAGEN (Reuters) – Norwegian company Equinor has bought a 9.8% stake worth about $2.5 billion in Danish offshore wind developer Orsted, it said on Monday, as it looks to expand its renewable energy portfolio.

Orsted shares are down 69% from their all-time high in 2021 as the offshore wind sector grapples with rising costs and technical problems with turbines.

However, Equinor said the stake acquisition was a long-term endeavor for the sector after the Norwegian company made slow progress towards its ambitious renewable energy targets.

The deal will count towards Equinor’s targeted renewable energy portfolio, adding 1.7 gigawatts (GW) of net generation capacity to the company’s target of installing 12-16 GW of capacity by 2030, CEO Anders Opedal told Reuters .

At the end of 2023, the company had less than 1 GW of installed renewable capacity.

“We see this as a good, counter-cyclical move at this time, resulting in a very attractive portfolio,” Opedal said.

Orsted’s share price rose by more than 8% in response to the news, before rising 5.8% at 1:00 p.m. GMT. Equinor shares fell 3.9%.

An Orsted spokesman declined to comment on the matter.

Equinor stated that it does not plan to increase its stake above 10% and will not seek representation on the management board.

The world’s largest offshore wind developer suffered costs and project delays last year as inflation drove up prices for turbines and other equipment and services.

“The offshore wind industry currently faces a number of challenges, but we remain confident in the long-term prospects for the sector and the key role that offshore wind will play in the energy transition,” he said.

According to the company, Equinor’s ownership position was built over time through a combination of market purchases and block trades.

The investment makes Equinor the second largest shareholder in Orsted after the Danish government.

Struggling to restore investor confidence, Orsted in February cut its investment and production capacity targets and suspended dividend payments as part of a wide-ranging review.

“Structurally, it doesn’t change anything in the direction Orsted is heading,” said Jacob Pedersen, an analyst at Sydbank.

He added that the company has broad political support in Denmark and there is no indication that the state will give up its 51% stake.

Denmark acquired Goldman Sachs as a strategic shareholder 10 years ago when the company – formerly DONG Energy – focused on oil and gas. The Wall Street bank doubled its 8 billion kroner investment just two years later, when Orsted was listed on the Copenhagen Stock Exchange in 2016.

(Reporting by Nora Buli and Terje Solsvik in Oslo and Jacob Gronholt-Pedersen in Copenhagen, Editing by Essi Lehto, Louise Rasmussen, Barbara Lewis and Christina Fincher)