Vestas falls 4.1% as US orders Orsted to shut down wind project

Vestas falls 4.1% as US orders Orsted to shut down wind project

Vestas Wind Systems A/S (Vestas) experienced a 4.1% decline in stock value after the U.S. Interior Department's Bureau of Ocean Energy Management (BOEM) ordered Orsted to halt the Revolution Winds project off the coast of Rhode Island. The order, issued by acting director Matthew Giacona, aims to address national security concerns and potential interference with reasonable uses of the exclusive economic zone [1].

Orsted, a Danish renewable-energy company, confirmed receipt of the order on Saturday. The Revolution Winds project, a joint venture with Global Infrastructure Partner's Skyborn Renewables, is 80% complete, with 45 out of 65 turbines installed. The project is intended to power more than 350,000 homes in Rhode Island and Connecticut [1].

Orsted is evaluating its options to resolve the matter quickly and hopes to proceed with construction towards the second half of 2026. The company is also assessing the financial implications and considering legal proceedings. Earlier this month, Orsted announced plans to raise $9.4 billion in fresh funds after developments in the U.S. wind market disrupted its asset sale plans [1].

The order from BOEM follows a series of challenges Orsted has faced since entering the U.S. offshore wind market. These challenges include supply-chain bottlenecks, higher interest rates, and trouble obtaining tax credits. The company previously pulled out of two high-profile wind projects off the coast of New Jersey [1].

The U.S. Department of Commerce has extended its sectoral tariffs to wind turbines and their parts and components, subjecting the steel and aluminum content to a 50% duty rate. This action covers 407 other product categories, including mobile cranes and bulldozers, which may be used during wind farm construction [2].

The tariff extension may impact the profitability of offshore wind projects, including Orsted's Sunrise project. Jacob Pedersen, chief stock analyst at Denmark's Sydbank, noted that the developer will carry the cost for possible tariffs, making projects like Empire Wind and Sunrise Wind less profitable [2].

Vestas stocks fell 1.07% to DKK28.57 per share at the Copenhagen Stock Exchange in early trading on Wednesday, while Orsted was up 0.11% to DKK135.15. Siemens Gamesa parent Siemens Energy fell 1.65% to €92.92 at the Frankfurt Stock Exchange [2].

Despite the challenges, Vestas CEO Henrik Andersen remains optimistic about the U.S. market's momentum through the end of the decade. The U.S. Treasury's new guidelines for renewable energy taxation provide valuable visibility for industrial planning and remove significant uncertainty regarding access to tax credits [3].

References:
[1] https://www.tradingview.com/news/DJN_DN20250825000417:0-orsted-subsidiary-gets-order-to-stop-work-on-u-s-offshore-wind-farm/
[2] https://www.facebook.com/mtkblb/posts/us-extends-50-steel-tariff-to-wind-turbines-and-componentscommerce-department-an/10163754138743573/
[3] https://www.marketscreener.com/news/vestas-and-the-wind-power-industry-welcome-the-us-tax-authorities-decision-ce7c51dfdf80f522