Once one of the most coal-intensive companies in Europe, Danish business, Ørsted’s now a world leader in renewable energy. Its first green energy solution was offshore wind production but has since expanded its range to include onshore wind farms, renewable hydrogen, solar and energy storage and bioenergy (the conversion of waste to energy). Ørsted’s a market leader in the development and production of offshore wind farms having also built the world’s first offshore wind farm in 1991. It has the largest number of operating wind farms worldwide with locations including Denmark, the UK, Germany, the Netherlands, Taiwan and the USA.
What problem’s Ørsted trying to solve?
Ørsted envisions a world that runs entirely on green energy to help combat the impact of climate change driven in part by the burning of fossil fuels which produce carbon dioxide (CO2). By looking at the development of alternative sources of energy, Ørsted aims to capture clean energy which helps reduce CO2 emissions whilst providing an alternative source of power to supply homes, vehicles and businesses.
At present more than 40% of the world’s CO2 emissions come from the burning of fossil fuels making them a huge contributor to the overall global rising temperature. The Intergovernmental Panel on Climate Change (IPCC) has identified a rise in the Earth’s temperature by more than 1.5°C, compared to pre-industrial levels, could have significant impacts on life on Earth, including an increase in the frequency and intensity of severe weather events such as heavy precipitation and heightened risk of drought in some parts of the world.
How does Ørsted help create an impact?
Ørsted develops and deploys a number of renewable energy solutions. As a pioneer in the development of offshore wind farms, Ørsted has built more offshore wind farms than any other company. It continues to expand its number of wind farms and has the largest installed capacity (the amount of energy that can be produced), of any company in the world for offshore wind farms. To date, Ørsted has installed 7.6 gigawatts (GW) of offshore wind with a further 11.8GW either under construction or having been awarded. Similarly, Ørsted also operates onshore wind farms where it partners with industry leaders to develop and deploy them. Currently, Ørsted operates wind farms across the US and Europe where it has a combined 4GW of energy in production and under construction.
Solar power and its storage is another key area of renewable energy. Ørsted operates a number of solar and storage centres where the energy captured from solar panels is then stored within batteries at the centres for distribution where needed. Ørsted currently has 460 megawatts (MW) of solar panels and energy storage under development. In the UK, battery storage is seen as an increasingly important source of energy supply and demand could grow as the UK’s expected to move away from carbon-based generating sources to renewable energy sources.
In 2006, Ørsted began using bioenergy, which is made from a source of renewable energy called biomass to replace coal as the source of energy for its plants in the production of heat and power. Biomass turns organic matter such as straw, wood chips and plants into energy, however, Ørsted ensures this is done sustainably by sourcing its biomass from a combination of sustainably managed forests as well as collecting sawdust from sawmills. By replacing its coal-powered plants Ørsted’s bioenergy has saved millions of tonnes of CO2 emissions each year. Through its transition from running its power plants on coal to sustainable biomass, Ørsted’s reduced its carbon emissions by more than 90% since 2006 and is on track to completely phase out the use of coal for its power stations by 2025.
The UK was the location for the innovative Renescience plant, the first waste-to-energy plant in the world. This technology turns household waste into energy by separating that waste into recyclable, non-recyclable and organic waste before converting the organic waste into biogas which can then be used for generating energy. Renescience technology means incineration is needed less to deal with waste which in turn, reduces air pollution. Additional benefits include a by-product of the process called digestate which can be used for restoring land and enabling any non-recyclable materials to be used as a source of fuel elsewhere.
What’s the size of Ørsted’s impact?
Ørsted’s onshore energy production supplies energy to hundreds of thousands of homes across several countries. For example, its Amazon Wind Farm in Texas, USA consists of 110 wind turbines that produce enough clean energy to power 90,000 homes. Its offshore wind farms produce energy to supply millions of homes and businesses. In the UK alone, Ørsted’s 13 offshore wind farms produce enough electricity to power 7 million homes and they continue to innovate more efficient wind turbines to produce higher levels of energy. An Ørsted turbine has gone from an energy-generating capacity of 0.45MW in 1991 to 11MW in 2022, meaning a single wind turbine today produces more than twice the energy of the 11 wind turbines that made up the world’s first offshore wind farm. With further wind farm construction underway Ørsted expects the energy produced to bring clean energy to millions more people.
Despite the increase in recycling, it’s estimated that 70% of household waste still goes to landfill. Ørsted’s Renescience technology treats up to 800,000 tonnes of waste per year, equivalent to about 70,000 UK homes, with additional benefits such as reducing air pollution and creating jobs.
Alongside the core business of producing renewable energy solutions, Ørsted has complemented this by committing to a number of projects which support biodiversity and the health of nature more generally. For instance, in 2022 it entered into a partnership with the World Wildlife Fund (WWF) to enhance the biodiversity of the oceans as well five new biodiversity pilot projects including a restoration project for the Humber Estuary and the ReCoral project in Taiwan.
Ørsted as a financial investment
Ørsted has demonstrated strong financial performance and is well-positioned to continue the expansion of its energy solutions into new markets. Its annual report for 2022 shows an increase in profit by more than 4 billion DKK (£475 million) over 2021 to 15 billion DKK (£1.78 billion) whilst operating profit increased by more than 32% from 24.3 billion DKK (£2.8 billion) to 32.1 billion DKK (£3.8 billion).
Ørsted will continue to build its renewable energy solutions over the coming years through a number of projects which are underway across Europe, the US and Asia as well as the formation of new partnerships to support expansion. In the UK, for example, Ørsted began construction of Hornsea 3, set to be the largest offshore wind farm in the world when completed, which is expected in 2025. Ørsted’s installed renewable energy capacity increased to 30.7GW by the end of 2022, which has helped keep it on track to achieve its ambition of delivering 50GW by 2030. Further, the company formed a number of partnerships in Spain in 2022, through which it will begin exploring the development of projects for onshore wind and solar power.
Overall, Ørsted remains on track to reach its target of delivering enough renewable energy to support 55 million people by 2030.
Ørsted’s inclusion in the Impact Plan
Ørsted’s one of the top 10 holdings in the Impact Plan and is helping to deliver solutions that help combat climate change by replacing carbon-intensive sources of power with clean sources. In addition, the company’s strong financial performance and developments currently under construction make it well-positioned to continue contributing to the fight against climate change.
The company’s renewable energy solutions are providing a clean source of energy that can power millions of homes and businesses around the world. It’s also creating new partnerships to help build additional clean energy-powered plants, expanding into new markets and creating more efficient processes and technologies, such as increasingly powerful wind turbines able to capture more energy, as it works towards its vision of a world run entirely on green energy.
The Impact Plan - a pension to help build a better world
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
