Stock of the Week: Orsted

Danish offshore wind pioneer is now looking outside Europe as its home region matures and subsidies wane

James Gard 22 October, 2021 | 12:28AM
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Stock of the week post-it

For our ESG special, our stock of the week has had a sustainable angle. We asked our Twitter followers to choose between a range of European green energy stocks, and it’s a dead heat between France’s waste and water group Veolia (VIE) and Denmark’s Orsted (ORSTED). After a tiebreak, Orsted, which designs, builds and operates wind and solar farms, was declared the narrow winner.

Orsted’s transformation from a coal producer to one of the world’s biggest renewable energy providers neatly tracks the transformation of the Europe’s energy priorities – and reflects the leadership of Scandinavia in green energy (see this week’s article ‘Europe’s Energy Market – Mapped’ for more on the continent’s energy mix). It’s also been in demand as an ESG stock amid a shortage of “pure play” listed companies in the renewable energy space. Formerly known as Dong Energy until 2017, Orsted has a net zero generation target by 2025 and zero carbon emissions by 2040 – and is now one of the largest producers of offshore wind power. As well as designing and constructing the physical infrastructure, Orsted signs power purchase agreements (PPAs) with companies to supply energy at fixed prices – for example, it signed a PPA with Amazon over a 10-year period as part of a German offshore wind project (although it has just sold part of this venture for DKr 9 billion).

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James Gard  is content editor for Morningstar.co.uk