Offshore wind developer Ørsted says preliminary and unaudited reporting leads it to expect an operating profit (EBITDA) of Dkr18Bn (US$3Bn) for 2020, which is above its most recent guidance of Dkr16-17Bn
The company said the increase in earnings is “primarily of a temporary nature,” but it also saw strong operational performance throughout the group in the last months of 2020. However, it has also warned that earnings from offshore will probably be lower in 2021 than they were last year.
“We achieved higher than expected earnings from our operating assets and trading related to hedging of our power exposures, and we saw positive temporary effects in our gas portfolio business due to higher gas prices at year-end,” the company said.
“In addition, fixed costs came in lower than expected… and we had lower than expected project development costs in the US, mainly due to timing.”
As in previous years, the company’s EBITDA guidance does not include earnings from new partnership agreements as it is difficult to predict the exact timing of potential farm-downs as well as the distribution of income between years if the partnership includes a construction agreement.
“In terms of new partnerships in 2021, we expect to close the 50% farm-down of Greater Changhua 1 following the agreement announced in December 2020,” the company said. “Furthermore, we plan to farm-down a 50% share of Borssele 1 & 2 around summer.
“Earnings from the offshore sector, excluding new partnership agreements, are expected to be lower than in 2020. Earnings are also expected to be lower than in 2020 adjusted for the non-repetition of earnings from existing partnerships in 2020 and the positive effect of ceasing to report according to the business performance principle in 2021.”
The company said the positive impact on operational earnings driven by the last 400 MW of Hornsea 1 receiving contracts for difference from April, and full-year effects from Borssele 1 & 2 net of the reduction in site earnings from the assumed farm-down, will be more than offset by a number of adverse effects.
“In 2021, we expect an increase in project development costs, operations and maintenance costs related to Greater Changhua 1 & 2a and Hornsea 2 before they commence generation in 2022, higher TNUoS charges, and lower earnings from Horns Rev 2 which came out of subsidy period in October 2020.” 2020 also had higher than normal wind speeds, which constitutes the largest negative impact year-on-year.
In contrast, in 2021, earnings from onshore are expected to be higher than in 2020, driven by increased earnings from new wind and solar farms coming online.