Internal Q&A: From oil to offshore wind, Ørsted has transformed (2023)

NEW YORK (AP) — One of Europe's biggest fossil fuel-using energy companies has been completely transformed in little more than a decade, doubling down on its focus on offshore wind.

Ørsted, formerly DONG Energy, a Danish oil and gas company, began aggressively building wind farms off the coast of Denmark, the UK and Germany in 2008, at a time when offshore wind power was a curiosity.

The company sold the North Sea oil and gas assets on which it built its identity to focus on clean energy, becoming Ørsted.

Fifteen years later, China, the UK, Germany, the Netherlands, Taiwan and Denmark have around 62 offshore nuclear wind power plants in rotation or under construction. Ørsted is one of the biggest developers.

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CEO Mads Nipper called Ørsted the “Tesla of offshore wind” because he didn't invent wind turbines, copper cables or substations, any more than the electric car company invented batteries or electric motors. But both showed that something was happening when few believed.

Ørsted is currently building offshore wind farms along the US East Coast, Europe and Taiwan. He is trying to create a global market for green hydrogen and hydrogen fuels. And their goal is to build 50 gigawatts of clean power generation by 2030.

Nipper spoke to the Associated Press about the industry. The interview has been edited for clarity and length.

Q: They say we will soon have big clean energy companies, just like we had big oil companies. Do you consider Ørsted a great clean energy company?

A: Not yet. But we will. There are no great clean energy powers. If so, it's us. But they don't exist yet. It would be presumptuous to say we're still a super-large… We invest, on a yearly basis, $6.7 billion net a year in renewables, which makes us comfortably a major player.

Q: How has the war in Ukraine affected Ørsted's business and the offshore wind industry in general?

A: I would say that this has not affected our offshore operations. Whether it is indirectly, tragically or ironically, actually positive, because in Europe it is clear that energy independence, and therefore energy security, and non-reliance on Russia for energy supply, is not just a matter of policy on change climate: it is a big political question. Security problem too. So, in fact, European governments in particular are extremely determined to make their renewable energy ambitions a reality… Look at the Ukraine. In fact, we are in dialogue with the Danish Ministry of Foreign Affairs to see what we can do to help Ukraine establish a reliable energy supply.

Q: Is Ørsted in the best position to help transition the United States to green energy?

A: Abroad I have no doubt. And on gravel, given the traction we have and also the opportunities we see, I think we would be among the best. I think it would be fair to say that, specifically on the ground, we would be in a better position. But with 5 gigawatts of marine power already awarded, we're not done yet. The United States is a major priority growth market for us globally. Our willingness to invest significant capital in the US market to help with this transformation remains intact.

Q: How can the incentives offered to green energy in the US through the Cut Inflation Act be used?

A: Given some of the recent headwinds in the industry, and in particular the higher cost of capital through interest rates and significant investment inflation due to both materials and supply chain bottlenecks , the Law of Deflation is key to face this challenge. And, frankly, also, in a world where there will be competition to attract capital for both marine energy and renewable energy, and the industrial jobs that follow, that's where the United States has clearly established a global benchmark for what I call it a sincere effort to really promote clean energy. This applies to both offshore and offshore, and is perhaps more revolutionary too, with the tax credit of up to $3 for green hydrogen. Overnight, this probably made the United States the cheapest market to produce green hydrogen, which, unlike electricity, can travel well if liquid fuel is produced from green hydrogen.

Q: You said that green hydrogen is a key component of the green transition and an important growth area for Ørsted. Can you talk about that?

A: We have built a strong pipeline of tangible opportunities, most of them in Europe, but also in the US, where we have an MoU with Maersk, the world's largest container shipping company, who are very committed to the elimination of emissions. carbon. maritime transport, up to 300,000 tons of e-methanol per year, which will be based exclusively on renewable hydrogen and biogenic CO2. We made the final investment decision for our first large-scale green hydrogen project in Sweden, where we would also produce methanol from biogenic CO2 and sell it to the marine sector. It is 50,000 tons per year. So it's not huge, but it's big enough to matter. It will power some ships. And by doing that, we don't think we're necessarily the largest producer of green hydrogen. We hope and believe that the big oil companies will also have this as a strategic bet. But we want to be a catalyst for change, we want to show that it is possible... We know that all the challenging sectors in the world, be it heavy transport, shipping, refineries, cement, they all need green molecules. So we know the market will be there and we're trying to help create it.

Q: Where do you see us on the offshore wind path?

A: We are at the end of the beginning... We are ready for a whole different level of escalation. The industry has grown, but we need to accelerate that expansion, including in the supply chain, with even more sustainable approaches, but also with significant support and investment. And I don't necessarily mean some kind of subsidy, but a significant availability of capital to scale an industry that needs to move much faster. So we are at the end of the beginning and also now in a reality where, especially in the last 12 months, it has become more difficult. But instead of saying “ah, so we need to slow down”, we would ask as an industry and certainly as a company: “how can we take advantage of a difficult situation?”

Q: You said a year ago that it is still possible to maintain the scenario of 1.5 degrees Celsius (2.7 degrees Fahrenheit), the elusive international target. Do you still feel that way?

A: I still don't think it's impossible, but it has gotten more difficult. It became more difficult because unfortunately the planet does not forget. And sadly, the current energy crisis means that we are burning more fossil fuels than ever before. In Europe, lignite and coal are burned to guarantee the existence of energy. And unfortunately, I also think that right now, at least, the big oil companies are probably, at least some of them, redirecting capital back into fossil fuels. As humanity, we must remain optimistic. I will say that I remain optimistic about the possibility of bringing the increase in temperature to a level that avoids the biggest catastrophes. But 1.5 points is excessive. ________

Associated Press climate and environmental coverage is supported by several private foundations. See more about AP's climate initiativehere. AP is solely responsible for all content.


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