Key Morningstar Metrics for Orsted
- Fair Value Estimate: DKK 170
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
On Jan. 12, the US District Court for the District of Columbia granted Orsted’s preliminary injunction for the Revolution Wind project, which was ordered to stop construction on Dec. 22, along with all US offshore wind projects. Orsted shares were up 5% in Jan. 13 trading.
Why it matters: This decision will allow Revolution Wind to resume construction immediately while the underlying lawsuit challenging the August and December federal orders progresses.
- The daily costs of interrupted construction for Revolution Wind amount to USD 0.7 million.
- The decision bodes well for Sunrise Wind, whose hearing is expected in the coming weeks. Its daily costs of interruption amount to USD 1 million. Assuming that construction resumes on Jan. 19 for Revolution Wind and one month later for Sunrise Wind points to total interruption costs in 2026 of USD 63 million or DKK 402 million, which is not that material.
The bottom line: We’ve trimmed our Orsted fair value estimate to DKK 160 per share from DKK 170, as the remaining investments in the Sunrise Wind project are heavier than we expected due to a more back-end-loaded phasing. We see a likelihood above 50% that the Dec. 22 suspension of leases for all US offshore wind farms will be lifted.
- This will pave the way for the commissioning of Sunrise Wind and Revolution Wind. In a worst-case scenario in which those projects are ditched, the negative valuation impact from forgone cash flows and cancellation fees associated with the remaining investments would amount to DKK 23 per share.
- This would bring our fair value estimate to DKK 137 per share, in line with the current share price, meaning that the worst-case scenario is priced in.
Big picture: On Jan. 9, during a meeting with oil executives at the White House, President Donald Trump said, “I’ve told my people we will not approve windmills,” but added, “maybe we get forced to do something because some stupid person in the Biden administration agreed to do something years ago.’’
