Ørsted shares had plunged 19.63% at the time of writing on Wednesday as it became known that the Danish renewable energy company was to halt two offshore wind farm developments in the U.S.
Ørsted released a statement saying that the move is to cost the company approximately 39.4 billion DKK (£4.6 billion).
The developer announced the discontinuation of its 2,248-megawatt Ocean Wind 1 and 2 projects in New Jersey.
This decision is part of the company’s ongoing restructuring of its U.S. offshore wind portfolio.
“Significant adverse developments from supply chain challenges, leading to delays in the project schedule, and rising interest rates have led us to this decision,” said Ørsted Chief Executive Mads Nipper on the matter.
Ørsted stocks have been rapidly falling for two months since August and are now down by approximately 60%.
The shares were trading at 273.1 DKK in the morning trade on Wednesday.
“The development of new wind energy projects is becoming increasingly challenging. Securing investment is particularly difficult in the current rate environment. Input costs are on the rise for wages and materials like steel and copper, and our experts highlight that offshore vessel hire costs are particularly elevated. It coincides that the maximum set price per MWh is simply set too low to offset these soaring costs,”said Louis Knight, analyst at Third Bridge.
“The future of many projects remains uncertain due to the increasing construction costs, combined with the fact that power prices for projects are fixed, ignoring inflation, through the UK’s contracts-for-difference price model”, he added.