Insider Q&A: From oil to offshore wind, Ørsted transformed

NEW YORK (AP) – One of Europe’s most fossil-fuel-intensive energy companies has completely transformed itself in just over a decade by doubling its offshore wind power.

Ørsted, formerly DONG Energy, for Danish Oil and Natural Gas, began aggressively building wind farms off the coasts of Denmark, the UK and Germany in 2008, a time when offshore wind was a curiosity .

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

Fast forward 15 years and China, the UK, Germany, the Netherlands, Taiwan and Denmark have around 62 nuclear wind power plants either spinning or under construction offshore. Ørsted is one of the major developers.

CEO Mads Nipper called Ørsted the “Tesla of offshore wind” because he didn’t invent wind turbines, copper cables or substations, just like the electric car company didn’t invent batteries or electric motors. But both proved that something was scalable when few believed it.

Ørsted is currently building offshore wind farms along the US East Coast, in Europe and in Taiwan. He is trying to create a global market for green hydrogen and hydrogen fuels. And it aims to build 50 gigawatts of clean energy 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’ll soon have clean energy supermajors, like we’ve had the oil majors. Do you consider Ørsted a clean energy supermajor?

A: Not yet. But we will be. There are no clean energy supermajors. If there was one, it’s us. But there aren’t any yet. It would be arrogant to say we’re a supermajor yet… We invest, depending on the year, $6, $7 billion a year solely in renewable energy, which comfortably makes us one of the top players.

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

A: I would say it hasn’t affected our offshore business. If indirectly, then tragically or ironically, actually positively, because Europe is realizing very clearly that energy independence, and therefore energy security, and not depending on Russia for energy supplies, is not just a question of climate policy: it’s very much political security as well. So, if anything, European governments above all are extremely determined to realize the ambitions of renewable energy… We are looking at Ukraine. We are currently in dialogue with the Danish Foreign Ministry to see what we can do to help Ukraine establish a reliable energy supply.

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

A: On offshore, I have no doubts. And on dry land, given the traction that we have and also given what we’re seeing of opportunity, I think we would be among the best positioned. I think I would be inclined to say that specifically onshore we would be better positioned. But with already 5 gigawatts of capacity allocated offshore, we’re not done. The United States is an important growth priority market for us globally. Our willingness to invest significant capital in the US market to drive that transformation is intact.

Q: How can I use the incentives offered for green energy in the US through the Inflation Reduction Act?

A: Given some of the industry headwinds recently and especially the rising cost of capital through interest rates and significant capital expenditure inflation due to both materials and supply chain bottlenecks, l ‘Inflation Reduction Act is a vital part of addressing this challenge. And honestly, even in a world where there will be competition to attract capital for both offshore and renewable energy, but also the manufacturing jobs that go with them, that’s where the US has clearly set a benchmark. globally for what I call a wholehearted push to really promote clean energy. This goes for both offshore but also onshore, and perhaps most revolutionary even with the tax credit of up to $3 for green hydrogen. Overnight, this most likely made the US the cheapest market to produce green hydrogen, which unlike electricity can travel well if you produce liquid fuels from green hydrogen.

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

A: We have built a strong portfolio of tangible opportunities, mostly in Europe, but also in the US, where we have an MOU with Maersk, the world’s largest container shipper who is very committed to the decarbonisation of shipping, for a maximum of 300,000 tons of e-methanol per year, which would be exclusively based on renewable hydrogen and biogenic CO2. We have made the final investment decision on 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. That’s 50,000 tons a year. So not huge, but big enough to matter. It’ll power a couple of ships. And by doing so, we don’t think we will necessarily be the largest producer of green hydrogen. We hope and believe that even the big oil majors have this as a strategic bet. But we want to be a catalyst for change, showing that it is possible… We know that all the hard-to-break down sectors of the world, be it heavy transport, shipping, refineries, cement, 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 trajectory?

A: We’re at the end of the beginning… We’re ready for a whole different level of scaling. The industry has downsized, but we need to accelerate that downsizing, including the supply chain, with even more sustainable approaches but also significant support and investment. And I don’t necessarily mean some kind of subsidy, but a significant supply of capital to scale an industry that needs to go much faster. So we’re at the end of the beginning and also now in a reality where, especially over the last 12 months, it’s only gotten more difficult. But instead of saying, “oh, we need to slow down then,” we would ask ourselves as an industry and we definitely will as a company, “how do we take advantage of a difficult situation?”

Q: A year ago you said it is still possible to stay within the 1.5 degrees Celsius (2.7 degrees Fahrenheit) scenario, the elusive international goal. Do you still feel like this?

A: I still don’t think it’s impossible, but it’s gotten harder. It has become more difficult because unfortunately the planet does not forget. And unfortunately, the current energy crisis means that we are burning more fossil fuels than ever before. In Europe, lignite and coal are burned to guarantee energy. And unfortunately I also think that right now, if anything, the big oil companies are probably, at least some of them, redirecting funds to fossil fuels. As humanity we must remain optimistic. I will say that I’m still optimistic, we will manage the temperature increase to be at a level where we can avoid the biggest disasters. But 1.5 degrees is a stretch. ________

The Associated Press’s climate and environmental coverage receives support from several private foundations. Learn more about AP’s climate initiative here. The AP is solely responsible for all content.

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