U.S. Offshore Wind Policy Risk and Its Impact on Ørsted’s Valuation

The U.S. offshore wind industry is facing an existential crisis under the Trump administration’s aggressive policy shifts, with Ørsted, the world’s largest offshore wind developer, bearing the brunt of regulatory and financial headwinds. From stop-work orders to tariff hikes and funding cancellations, the sector’s long-term viability is now inextricably tied to the political volatility of a regulatory environment that appears increasingly hostile to renewable energy. For investors, the question is no longer whether offshore wind can succeed in the U.S., but whether it can survive the current administration’s sustained assault.

The Stop-Work Order: A Regulatory Clampdown

The administration’s January 2025 presidential memorandum marked a turning point, temporarily halting all offshore wind leasing on the Outer Continental Shelf and initiating a review of federal permitting practices [1]. This move effectively froze new project approvals, including critical infrastructure like the Revolution Wind project off Rhode Island and Connecticut. Revolution Wind, 80% complete with $5 billion already invested, became a poster child for the administration’s tactics when the Bureau of Ocean Energy Management (BOEM) issued a stop-work order in August 2025, citing “national security concerns” despite prior approvals from 15 federal and state agencies [2]. The developer, Ørsted, estimates $1 billion in breakaway costs if the order persists, while the project’s commercial operation—scheduled for late 2026—now hangs in limbo [3].

Legal battles are intensifying. Ørsted and other developers argue that the stop-work orders are “arbitrary and capricious” under the Administrative Procedure Act, a claim echoed by states like New York and California, which have joined lawsuits to challenge the administration’s authority [4]. Yet, the broader message is clear: regulatory uncertainty has become a defining feature of the U.S. offshore wind landscape.

Tariffs and Cost Inflation: A Double Whammy

Compounding these regulatory risks are the 2025 U.S. tariffs on aluminum and steel, which directly impact the cost structure of offshore wind projects. Ørsted’s CEO, Rasmus Errboe, has warned that these tariffs will add “meaningful” costs to its U.S. projects, including Sunrise Wind and Revolution Wind [5]. One industry source estimates the tariffs could inflate Revolution Wind’s costs by $180 million alone [6]. This comes at a time when supply chain bottlenecks and inflation have already driven up construction costs, squeezing margins across the sector.

The financial hit is not limited to Ørsted. The Trump administration’s cancellation of $679 million in federal grants for port infrastructure—critical for transporting wind components—has further destabilized the industry’s cost base [7]. For investors, these developments signal a sharp rise in sector-wide risk premiums. According to S&P Global, short interest in Ørsted’s shares has surged, with the stock down over 86% from its 2023 peak [8].

Ørsted’s Strategic Response: Rights Issues and Portfolio Rationalization

Faced with a perfect storm of policy and financial risks, Ørsted has launched a DKK 60 billion ($9.4 billion) rights issue to shore up its balance sheet [9]. This move, supported by a $939 million commitment from partner Equinor, underscores the company’s determination to weather the U.S. storm [10]. However, the rights issue also reflects a strategic pivot: Ørsted has exited markets like Norway and Spain, deprioritized Japan, and mothballed projects such as Ocean Wind 1 and 2 in New Jersey [11]. These cuts are expected to free up DKK 35 billion in capital expenditures and reduce development costs by DKK 3 billion through 2026 [12].

The company’s cost-cutting measures extend to its workforce, with plans to reduce fixed costs by DKK 1 billion by 2026, including 600–800 job cuts globally [13]. While these steps aim to strengthen Ørsted’s financial resilience, they also highlight the sector’s fragility in the face of political headwinds.

Long-Term Viability: A Sector at a Crossroads

The U.S. offshore wind industry’s long-term prospects hinge on two critical factors: the durability of the current administration’s policies and the ability of developers to secure stable financing. For Ørsted, the Revolution Wind and Sunrise Wind projects represent both a strategic bet and a financial exposure. If the stop-work orders are lifted and the administration’s anti-wind stance softens, these projects could still deliver returns. But if the regulatory environment remains hostile, Ørsted’s U.S. portfolio risks becoming a drag on its global ambitions.

Investors must also weigh the broader implications of the administration’s actions. The cancellation of federal funding and the rollback of the Inflation Reduction Act’s tax incentives have created a vacuum in capital allocation. According to the Global Status Report 2025, U.S. offshore wind capacity additions are projected to fall by 40% compared to pre-2024 levels [14]. This shift is not just a policy issue—it’s a market signal that the U.S. is no longer a reliable destination for long-term renewable energy investment.

Conclusion: Navigating a Hostile Terrain

The U.S. offshore wind sector is at a crossroads, with Ørsted’s valuation serving as a barometer for the industry’s health. While the company’s rights issue and cost-cutting measures provide short-term stability, the long-term outlook remains clouded by political volatility. For investors, the lesson is clear: in a regulatory environment where policy shifts can halt multi-billion-dollar projects overnight, diversification and contingency planning are no longer optional—they are survival strategies.

As the legal and political battles unfold, one thing is certain: the U.S. offshore wind industry’s future will be defined not by technological potential, but by its ability to navigate an increasingly unpredictable political landscape.

Source:
[1] Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects [https://www.whitehouse.gov/presidential-actions/2025/01/temporary-withdrawal-of-all-areas-on-the-outer-continental-shelf-from-offshore-wind-leasing-and-review-of-the-federal-governments-leasing-and-permitting-practices-for-wind-projects/]
[2] Revolution Wind developer sues Trump administration over stop-work order [https://www.wbur.org/news/2025/09/04/revolution-wind-orsted-sue-boem]
[3] Connecticut, RI Governors Fight Trump-Ordered Halt to ... [https://www.enr.com/articles/61254-updated-connecticut-ri-governors-fight-trump-ordered-halt-to-nearly-done-wind-project]
[4] States, companies sue Trump administration over wind ... [https://www.politico.com/news/2025/09/04/orsted-revolution-wind-trump-administration-00543607]
[5] Orsted CEO: Trump tariffs will impact cost of US projects. [https://energynews.oedigital.com/power-markets/2025/04/10/orsted-ceo-trump-tariffs-will-impact-cost-of-us-projects]
[6] Ørsted Remains Committed to U.S. Offshore Wind Projects [https://www.rtoinsider.com/104742-orsted-remains-committed-us-offshore-wind-projects/]
[7] Trump cancels $679M for offshore wind projects, including ... [https://thedailyrecord.com/2025/09/02/trump-cancels-offshore-wind-funding-679m/]
[8] Caught in the Crosswinds: Ørsted's Rise in Short Interest. [https://www.spglobal.com/marketintelligence/en/mi/research-analysis/caught-in-the-crosswinds-rsteds-rise-in-short-interest.html]
[9] Ørsted shares sink over $9.4B rights issue tied to US ... [https://www.renewableenergyworld.com/wind-power/orsted-shares-sink-over-9-4b-rights-issue-tied-to-us-offshore-wind-market/]
[10] Boost for Ørsted as Equinor agrees to participate in upcoming [https://www.rivieramm.com/news-content-hub/boost-for-orsted-as-equinor-to-participate-in-rights-issue-85966]
[11] Ørsted presents updated business plan for 2024-2030 [https://www.windtech-international.com/company-news/orsted-presents-updated-business-plan-for-2024-2030]
[12] Capital Markets Update: Ørsted presents ..., [https://orsted.com/en/company-announcement-list/2024/02/capital-markets-update--oersted-presents-updated-b-82051]
[13] Ørsted presents updated business plan for 2024-2030 [https://www.windtech-international.com/company-news/orsted-presents-updated-business-plan-for-2024-2030]
[14] GSR 2025 | Global Overview, https://www.ren21.net/gsr-2025/global_overview/