The American dream for Orsted , one of the world’s largest developers of offshore wind farms, appears to have turned into a nightmare, spooking investors and casting a shadow over the renewable energy market. Yet, some see a buying opportunity even as the company navigates a hostile policy environment, a stalled project, and an urgent multi-billion plan to raise capital that has sent its shares tumbling by nearly 40% this month. The latest blow came on Friday, when the U.S. government issued a surprise “stop-work” order for Orsted’s Revolution Wind project off the coast of Rhode Island, citing “national security interests.” The move was an unexpected setback for a project that was already 80% complete, with 45 of its 65 massive turbines installed, after a nine-year permit review process. DNNGY 1M mountain The halt could not have come at a worse time for Orsted. Earlier this month, the company had announced its intention to raise 60 billion Danish kroner ($9.4 billion) through a rights issue — equivalent to nearly half its market capitalization — after failing to find a partner for a major U.S. project. The crises have triggered a sharp sell-off in Orsted’s stock, leaving investors to question the viability of its ambitious growth plans and the stability of its funding model, which relies heavily on selling stakes in its projects. The uncertainty has been so pronounced that S & P Global Ratings downgraded the company’s long-term credit rating to ‘BBB-‘ from ‘BBB,’ citing a deterioration in Orsted’s overall business environment and a lack of capital expenditure flexibility. Analysts at Goldman Sachs noted the rights issue was “largely unexpected” and would create “3-4 weeks of market uncertainty” until the terms are disclosed in early September. Despite the turmoil, analysts at Berenberg see the sell-off in its share price as overdone. The equity analysts upgraded the stock to a “Buy,” saying that the company’s decisive move to shore up its balance sheet provides a financial cushion to withstand even the most severe outcomes. “I think it’s fair to say we think the shares are now pricing in close to a worst-case scenario, with the c40% share price decline in the last three weeks potentially an overreaction,” James Carmichael, energy analyst at Berenberg, told CNBC. “There is still some near-term price risk given the ongoing rights issue and the continuing uncertainty in the US, but we think there is an opportunity here for the brave.” Berenberg’s analysis suggests the rights issue gives Orsted the balance sheet capacity to fund its capital needs through 2027, even in an unlikely worst-case scenario where it cancels its U.S. projects and fails to complete any other planned disposals. In such a scenario, Berenberg modeled a downside valuation of 172 Danish kroner per share — or 13% lower from the current share price — viewing that as a floor. Money managers also appear to be seeing value for Orsted’s stock at the current level. New York-based hedge fund ValueWorks reportedly bought a sizeable stake in the wind energy giant earlier this month, making it a top-40 shareholder. ‘Stop-work’ order’s impact The immediate challenge, however, remains the Revolution Wind project, a 704 MW farm jointly owned with BlackRock’s Global Infrastructure Partners. While Orsted has not provided a cost estimate for the pause, a similar order placed on Equinor ‘s Empire Wind project earlier this year was reported to cost around $47 million per week, according to estimates from Sydbank analysts. Orsted has said that it is evaluating all options, including legal proceedings, to resolve the matter and aims to get the project back on track for completion in the second half of 2026. However, analysts at UBS noted that the major issue is not Revolution Wind itself, but the “rise in the risk profile for the Sunrise Wind project.” That much larger project, which is 100% owned by Orsted and is at an earlier stage, represents a far greater financial exposure. In fact, the failure to secure a partner for Sunrise Wind was the primary trigger for the rights issue. The $9.4-billion challenge Sydbank’s Jacob Pedersen noted the risk that project write downs could force the company’s capital needs to swell beyond the planned 60 billion Danish kroner, making it harder to attract investors to the share issue. “Billion-dollar write-downs could mean that the capital requirement increases beyond the 60 billion kroner, and we do not rule out that the stop-work order could delay the capital raising,” Pedersen said in a note to clients on August 25, according to a Google translation. “With the increased uncertainty of new write-downs, it may become more difficult to entice shareholders and investors to subscribe for new shares.” The company’s management told analysts, according to RBC, that the capital raise provides the necessary balance sheet strength to account for the U.S. uncertainty. They also confirmed that even if planned divestments of its Hornsea 3 project in the U.K. and its Greater Changhua 2 project in Taiwan were to fail, and the company had to pay breakaway costs on its U.S. projects, it would have the necessary funds through 2028. The Danish state, which holds a 50.1% stake in Orsted, has committed to participating in the rights issue, providing a critical anchor of support. A syndicate of banks including Morgan Stanley, BNP Paribas, Danske Bank, and J.P. Morgan have been appointed to underwrite the remainder of the offering. The company is expected to reveal further details around its fund raising efforts on September 5. For many investors, it will be a day they hope their nightmare ends.
