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The Wind Industry’s Success Has Become Its Biggest Threat


The head of one of the world’s biggest developers of renewable energy, Denmark’s Orsted, worries that the energy transition could see a slowdown as rising competition and interest rates squeeze returns and upend the case for investment.

Orsted is the world’s largest developer of offshore wind farms, which it helped pioneer from a niche technology into one of the fastest-growing forms of renewable energy. Offshore projects can use much larger turbines — the size of skyscrapers — and are able to tap into stronger and more consistent winds off the coasts. Europe, China, and the US plan to rapidly increase their offshore wind fleets to reach their climate goals.

But while governments all over the world are raising their ambitions to replace fossil fuels with clean electricity, the companies expected to deliver that shift are under financial pressure. Executives are starting to sound the alarm: Growing the industry enough to avoid catastrophic climate change will require trillions of dollars of additional investment, and the ability for wind-power companies to make healthy returns. At the moment, that path to viability is complicated by the rising cost of borrowing money to build clean power plants, plus increased competition; in the future, it could be further complicated by European windfall taxes on renewable power producers.

“We are a company with a vision of a world that runs entirely on green energy,” Mads Nipper, chief executive officer of Orsted, told Bloomberg Green on an episode of the Zero podcast. “And the lack of capital flowing to that transformation is the single biggest risk we have.”



Published on 1/31/2023 (50 days ago) Energy Crisis