2/6/2025

speaker
Moderator
Conference Operator

Ladies and gentlemen, welcome to the Orsted Q4 2024 earnings call. I would like to remind you that all participants will be in listen-only mode, the conference being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or for broadcast. Today's speaker, our group president and CEO, Rasmus Erbel, and CFO, John Wesley. Gentlemen, please begin.

speaker
Rasmus Erbel
CEO, Ørsted

Hello, everyone, and thank you for joining today's presentation. This is my first earnings call as CEO of Ørsted, and I'm honored and humbled to step into this role after having been with the company for 13 years. Together with our skilled employees, I and the rest of the group executive team will work relentlessly to create value for our customers, shareholders, and stakeholders at large. Ørsted has a strong foundation with unique capabilities, and I'm looking forward to taking the lead on the transformation necessary to navigate the headwinds that Ørsted and our industry currently face. While I'm only a few days into the role, I know Ørsted and the challenges we face very well, and I am convinced that the measures we are introducing today are needed, in particular with respect to the lowering of our projected investments towards 2030 by approximately 25% on a like-for-like basis through a more disciplined approach to capital allocation. Ørsted will continue to be active across our three regions, and our number one priority will be to deliver on our committed construction program. That being said, when we pursue new development opportunities across offshore wind, onshore wind, solar PV, battery energy storage and also carbon capture, we will first and foremost prioritize the most financially attractive offshore wind opportunities in regions and countries where we see the most attractive framework conditions and investment environment, and where we have the most distinct competitive differentiation and ability to leverage and unfold our business model across the full life cycle. As it has been the case in the past, Offshore wind is where we have our unique and most distinct capabilities, and our capital allocation going forward will continue to reflect this. Further, our reduced growth ambitions towards 2030 will inevitably lead to Ørsted becoming a more focused company. We are currently constructing more than 8 GW of offshore wind, but with an expectation to see a lower construction of GW per year towards the back end of 2030, we will in the coming years be right-sizing our organization to fit our future needs. At the same time, we expect to see growth, in particular in our generation and trading and revenue business, as further offshore wind farms will be commissioned in the years to come, adding to our existing operating fleet of 10 GW offshore wind. At the same time, I want to reiterate that despite the recent and highly disappointing challenges related to our U.S. offshore wind projects under construction, and the adverse impact it has had on our capital structure, we remain fully committed to our target of having a solid investment grade credit rating. With that said, let me start with the performance highlights and strategic milestones achieved during 2024. For the full year 24, we achieved an EBITDA of 24.8 billion DKK, in line with our guidance of 24 to 26 billion. Adjusted for cancellation fees and new partnerships, this represents an increase of 700 million compared to last year, and an earnings mix where our offshore and onshore assets were significant contributors, highlighting again the strong operational platform we have. During 2024, we also managed to settle a large number of contracts related to Ocean Wind 1 and Flagship 1. Some of these settlements were finalized at better than assumed terms, leading to a total net reversal of cancellation fees of 7.3 billion. At this point, we have less than 2 billion remaining in the provision, meaning that we have nearly worked our way through all the contracts related to the projects and significantly better outcomes than we had expected. The total group EBITDA for 2024, including the new partnerships and these cancellation fees, was 32 billion, which was one of the highest EBITDA levels in the history of the company. As part of 2024 accounts, we have recorded total impairments of 15.6 billion for the year, with the majority relating to the adverse developments within our US offshore wind portfolio. While a portion of the impairments are driven by the increase in the long-dated US interest rates, as well as prevailing market uncertainties outside of our control, we are very disappointed with the execution challenges and will ensure an increasingly sharp focus going forward on delivering these projects according to the updated schedules and budgets. We will also work towards being more granular in our communication around the progress and the risk in our offshore construction projects. For the full year, adjusted for impairment losses and cancellation fees, we delivered a return on our capital employed of 10.1%, which is slightly below our average ROCE target towards 2030. We will come back to this number later in the presentation. Lastly, our continued and relentless focus on safety continues to pay off, as we have reduced our total recordable injury rate in 2024. It is the second year in a row that we experience a reduction, and we see it as a result of our long-term focused effort. While we are very pleased with this development, we will never rest when it comes to safety, and we will go to work every day with an aspiration to bring it down even further. Turning from the performance highlights towards our strategic milestones, where I am pleased to say we made significant progress through the year. First, we have commissioned around 2.4 gigawatts of total renewable capacity across offshore and onshore assets, representing a significant contribution to the build-out of our operational fleet of assets. In addition, we very recently took the final investment decision on our Baltica II project in Poland, All major component and vessel contracts for the projects have been signed, logging in the majority of the project's CAPEX, which significantly derives the project's We are satisfied with the value creation of the project, which has an attractive risk-reward profile. This FID highlights that solid investment opportunities continue to exist despite the challenging industry backdrop, and I am proud of the team getting the project to this important milestone. Another key milestone for 2024 was the award of 3.5 GW of offshore wind in the UK allocation round 6, with an inflation-linked offtake for 1.1 GW share of the Hornsea 3 project and 2.4 GW for the Hornsea 4 project. We are very satisfied with the outcome of the auction in one of our core markets, and we acknowledge that the UK government has shown resolve in adapting its support schemes for offshore wind to reflect current market conditions. In addition to the UK, we find the recent regulatory developments for offshore wind in Poland and Denmark encouraging. Within our divestment program, we achieved significant progress during 2024 and delivered in line with our expectations. During 2024, we secured proceeds of around 22 billion across five divestments. This demonstrates our ability to take projects to the market, and we continue to see an interest for our broad asset portfolio. Despite the challenging market conditions, we are on track to deliver on our divestment program towards 2026, which Trond will talk more about later in the presentation. During the year, we also shut down our last coal-fueled combined heat and power plant, the SBI power station in Denmark. This marks the end of a chapter in our green transformation and is the last major step in our journey to meet our industry-leading science-based targets of reducing our scope 1 and 2 emissions intensity by 98% by 2025. Going forward, our entire energy generation will essentially be fossil-free. On innovation, we introduced new groundbreaking technology as part of the installation of Godeven 3, and we have successfully developed and used a first-of-its-kind noiseless monopion installation technique, which enables a further reduction of the potential impact from construction activities on the marine environment as well as constructing in a more cost-effective way once we have adopted this at scale. Let's turn to slide five, where I will walk you through the adjustments to our business plan. While we did achieve significant strategic steps during 2024, we also saw adverse developments and continued challenging market conditions. While the majority of these industry-related challenges were reflected in the updated business plan we presented a year ago, We have seen further challenges materializing, which have put our capital structure under pressure. So in addition to the number of ongoing activities we have talked about before, we are now taking further measures to improve our value creation and competitiveness, as well as ensuring that we have a self-funded plan that can improve our capital structure in the medium to long term. These measures are all within our control, and they will contribute to our business being more efficient, more focused, and more simple going forward. As I mentioned, we will first and foremost prioritize offshore wind opportunities in the markets with the most attractive investment environment and where we can leverage our distinct capabilities. This focus will lead us to pursue and invest into fewer opportunities than we have previously anticipated, and combined with a dedicated focus on executing the current construction portfolio and our 2026 targets, we have chosen to step away from our previous 2030 gigawatt ambitions. That being said, I want to make it absolutely clear that we still fundamentally believe in the long-term attractiveness of offshore wind and renewables more broadly. As an extension of the lower expected build-out and following the adverse developments that have impacted our capital structure, we will reduce our investment program to 2030 with around 25% compared to our previous ambition. This decision is in line with our commitment to ensure a strong capital structure that can support a solid investment grade rating. We want to be a focused and efficient business, and therefore we are introducing additional measures to achieve this. We are delivering on the cost savings plan launched a year ago, which will bring permanent cost savings of 1 billion per year as part of organizational efficiency initiatives, and we will take further measures to go beyond this. We will not be expanding and constructing at a pace similar to our current build-up program, and we will, as a natural consequence, be continuously right-sizing our costs and organization in the years to come to fit our value and capacity ambition. The final part of this is a very clear prioritization of value over volume, including a more focused capital allocation. On the back of the challenge renewable industry, and the adverse developments experienced in recent years, we will employ an even more focused approach to our capital allocation. And we do see that we have plenty of opportunities in our core markets to leverage our core capabilities. With the opportunity set that we have, we will only select and progress investments within the most attractive market opportunities and continuously assess which markets we should continue to prioritize. Turning to slide six and our investment program. In February last year, we provided guidance on our long-term investment program, where we expected to invest around 270 billion towards 2030. When we take an adjusted view on this number today, reflecting the same group of projects, we see that the CAPEX program would have increased by around 10% on a like-for-like basis. This is primarily based on both cost increases for the offshore projects under construction, as well as cost increases in the projects in our pipeline, which we have not yet committed to. As a result of the adverse developments in 2024, we have decided to prioritize our investments and reduce our total gross investment by approximately 20-25% on a like-for-like basis towards 2030, which means we expect to invest in the range of 210-230 billion towards 2030. This range can be categorized into three components. First, we invested around 43 billion last year into our construction portfolio. Second, the incremental investment level into our 9 gigawatt construction portfolio is planned to be around 130 billion and will take place towards the back end of 2027. When we look beyond our construction portfolio and the committed CAPEX, we have an investment capacity of around 40 to 60 billion. The allocation of this capital will be prioritized to the most value-accretive opportunities going forward, while ensuring a continued stable capital structure. I will now turn to slide 10 and our current build-out plan. As of today, we have 18.2 GW of installed renewable capacity, more than half of which is within our offshore business. We currently have 9.2 GW of renewable capacity under construction, of which 8.4 GW is offshore capacity. The capacity under construction will come online throughout the next three years and once fully commissioned by 2027, the installed capacity of our portfolio will increase by around 50% in total and almost double for offshore wind. It will not be easy and further challenges will arise. but delivering on this plan in the coming years will make us enter the back end of this decade from a position of strength and will solidify our position as the undisputed global leader in offshore wind. We have a high degree of CAPEX visibility for the projects under construction, and we expect to hold investments of around 30 billion from now on and onwards to complete installation of the construction portfolio. It is important to highlight that we do have a meaningful investment capacity to support further growth beyond this build-out. However, I will reiterate and emphasize that it is solely the value creation and capital structure that will drive our future capital allocation decisions. Within the strategic parameters that we have set, we have named a few of our near-term opportunities, including Horn C4, where we have secured off-take but not yet taken a final investment decision. And as we ensure to limit capital commitments in the early stage of project development, we can prioritize or deselect based on risk-reward of the projects. We do have a broad opportunity set of development projects, both near and long term, and we will only progress the opportunities that are aligned with our capital allocation principles. Despite stepping away from our 2030 ambition, it is important to highlight the broad set of opportunities that we have available. We have numerous options ranging from centralized and decentralized tenders, seabed licenses, as well as greenfield opportunities across our three regions. And this showcases that the long-term outlook for the renewable industry in Ørsted remains attractive. Let's turn to slide 8 and our earnings outlook and return on capital employed. When looking at our earnings growth in the coming years, we expect to deliver significant growth. By 26, we expect to reach an EBITDA level in the range of 29 to 33 billion, which implies a CAGR of 12%. The earnings increase towards 25 will predominantly be driven by ramp-up generation within our offshore business. Trond will cover this in further details in a minute. Looking at the earnings increase from 2025 into 2026, this consists of two main categories, with the first one being ramp-up generation from our offshore and onshore assets, including full-year contribution from assets being commissioned during 2025. And secondly, we expect to see higher earnings from our existing partnerships agreements due to timing of transactions. This second component is obviously associated with some uncertainties. As you may notice, the EBITDA guidance range for 2026 has been slightly lowered as a result of the delayed installation and thus ramp-up generation from our Revolution and Sunrise wind projects. When we turn to our ROCE for the period up to 2030, we continue to see it at an attractive level. When comparing to the outlook that we saw one year ago, our ROCE will improve as a result of the lower investment program. However, this is offset by the higher cost and schedule delays that we have seen to our U.S. construction projects, as well as higher cost for our pipeline projects. The totality of these developments lead us to revise our ROCE for the period to around 13%. We continue to guide on this metric towards 2030 as the different scenarios and opportunities that we internally are assessing and working within on this longer-term horizon all will yield a similar level of ROCE over the period. Let's then turn to slide 9, where I will give a status on our construction projects. For our German program, our Godwin 3 project is producing at full capacity. The final park testing is expected to be completed within the coming two months. At Borkum Riftgrund 3, all foundations and turbines have been installed, and our mitigating actions have successfully managed the installation of the project according to the schedule. As mentioned at our Q3 earnings call, the German transmission system operator has seen a delay to the grid connection and therefore first power is not expected until end of this year. The delay of the grid connection will be compensated according to market regulation and is reflected in our EBITDA guidance for 2025. In Taiwan, we continue to progress the construction of Greater Changwa 2B and 4, with the expected completion of the offshore substation jacket and topside during the quarter. The fabrication of foundations and cables continue to progress as planned, and turbine foundation installation is expected to start in the first half of 2025, and we expect to see first power over the summer. Commissioning of the project is currently expected at the very back end of 25, with the risk of it becoming early 26. For Revolution Wind, construction remains well underway. We have currently 52 monopiles installed, 18 turbines installed, and the vast majority of the export cable in place. Nearly all remaining components, including monopiles and array cables, are fabricated. We have a strong visibility on the fabrication and installation of remaining components, including the offshore substation monopile, where we have secured a viable path forward for the installation. The onshore substation work continues to progress according to our updated plan. We have a suitable level of contingency in the project reflecting the remaining risks, and we are delivering according to the updated schedule. We expect to complete offshore construction work later in 2025 and commission the project in the back end of 2026. For Sunrise Wind, we continue to progress the construction. As we shared a few weeks ago, the project has seen adverse developments in terms of higher costs and schedule delays, which have been factored into the business case now. While we work extremely dedicated to deliver on the updated schedule and timelines, We have seen good progress in terms of onshore construction work as well as fabrication of the offshore components such as monopiles, turbines and export cable. We expect to commence the offshore construction work during the first quarter of this year. Regarding the U.S., we have closely followed the recent political and policy developments, and we are currently reviewing the executive order on wind energy that was issued on January 20. Appointees are being confirmed as we speak and are stepping into their positions, and these officials will interpret and implement these policies. We will continue to update our assessment throughout this process. For the Honshi 3 project, the construction continues to progress as planned, both with the onshore scope as well as the offshore activities, which will commence later this year. The offshore works will relate to pre-construction activities such as boulder clearance and rock dumping. Also, the construction work for the co-located battery storage solution is planned to start during the second quarter of this year. We currently expect to commission the project at the back end of 2027. Lastly, we have taken the final investment decision on our BaltiCat 2 project. The project holds a 25-year inflation index CFD contract and has secured all major components and vessel contracts for the project, logging in the majority of the capex. We are satisfied with the value creation of the project, which has an attractive risk-reward profile, and we expect to commission the project in late 2027. In onshore, the construction of our European and US portfolio continues to progress well, with construction work ongoing in the US, Germany and Ireland. Let me then finish my part of the presentation with slide 10, summarizing our value creation. Even though we will be reducing our investment program, we do have investment capacity to pursue the most attractive projects amongst the growth opportunities we have in our portfolio, in addition to our current under construction portfolio. Our targeted value creation remains in place with a spread-to-back target of 150 to 300 basis points. We remain firmly convinced that our business will continue to deliver value through a solid and attractive platform. Our operational renewable assets continue to deliver strong cash flows based on a high degree of contracted and regulated revenues. And as I have highlighted on the previous slides, we have a high degree of visibility on the near-to-medium term capacity expansion and EBITDA growth through our construction portfolio of renewable assets. The combination of earnings from our operational assets construction portfolio, as well as the return requirement for future investment capacity, will continue to ensure attractive returns on our investments with a ROCE of around 30%. With this, let me hand over to Trond and a walkthrough of our finances.

speaker
John Wesley
CFO, Ørsted

Thank you, Rasmus, and good afternoon, everyone. First, let me start with slide 12, the EBITDA for the year 2024. For the presentation, all numbers are quoted in Danish cronies. In 24, we realized the total underlying EBITDA of 24.8 billion. Total EBITDA, including new partnerships and cancellation fees, is 32 billion, one of the highest EBITDA levels in Ørsted history. The operational earnings have been solid and consistent throughout each of the quarters and delivered in line with our expectations. Let me walk you through the main earnings developments for the year. For our offshore business, the overall earnings came in around the same level as last year. The earnings from CITES increased significantly, driven by ramp-up generation, higher wind speeds for the year, and higher prices on green certificates and inflation-indexed assets. Also, the CITES performed was positively impacted by around 900 million as a result of change in our cost allocation mythology, which does not affect the overall earnings profile. Earnings from our existing partnership decreased compared to last year and were mainly related to updated assumptions and increased provisions in the operation and maintenance contracts of the UK offshore transmission assets. The losses reflect a net present value of the remaining lifetime of the projects and are driven by, expectedly, higher cost relating to assumptions on transmission charges and servicing of the offshore substations. Despite not owning these assets, we have assumed the operations of them to ensure that we can maximize the generation output of the wind farms and ensure Any potential downtime in the export cables are identified and fixed as quickly as possible. Also, we have seen higher costs for Boken Rifkin, which have led to reduced earnings under the construction agreement. Lastly, there is an increase of other bucket, primarily driven by the cost reallocation of overhead that I mentioned before, of about 900 million. For onshore, earnings increased by one billion in line with expectation, primarily due to ramp up generation from new assets that have been commissioned during 24. Within bioenergy and other, Earnings from our combined heat and power plants were around the same level as last year, whereas earnings from our gas business decreased. As a temporary positive effect from revaluation of our gas at storage recognized in 2023 was not repeated to the same extent this year. Finally, we have continued to work through the contracts relating to Ocean Wind 1 and for the full year we have reversed cancellation fees of 7.3 billion due to better than assumed outcomes of the contract settlements. Turning to slide 13 and our financial guidance for 2025, for the full year of 2025, we expect an EBITDA in the range of 25 to 28 billion. Let me go through the expected drivers for the different segments. In our offshore business, overall earnings are expected to be higher in 2025. For the sites, our earnings performance is expected to increase, driven by ramp-up generation of a number of projects, as well as compensation for the grid delay at Borken Rifklund 3 in Germany. Similarly, we expect to see higher availability rates in 2025 compared to 2024, leading to an increase in earnings. We also expect earnings increase from inflation-linked ROCs and CFD farms, partly offset by lower offtake price assumptions for our merchant assets, as well as lower earnings at Anholt and the older German assets, as they respectively see a phase-out and a step-down in the subsidy level. Also, we expect to incur ramp-up costs relating to revolution win and sunrise win as they are preparing for operations, but we do not expect any ramp-up generation. Earnings from our existing partnership is expected to increase as we do not anticipate the negative effects in 24 to be repeated in 25. For our offshore business, we anticipate a higher share of project development costs to be expensed and likewise higher fixed costs. For our onshore business, we expect an increase in the earnings performance. This is driven by the ramp-up capacity as well as expectedly higher availability rates. These elements are partly offset by the impact of the lower generation capacity following the divestment of a portfolio of projects to ECP. For our bioenergy segment, we expect earnings from our combined heat and power plants to be in line with the same level as last year. For our gas business, we expect earnings to increase driven by the higher gas volumes that will be available following the full reopening of the Tyra field. Finally, we expect gross investments in the range of 50 to 54 billion, driven by investments into our offshore and onshore construction activities. Our gross investment guidance is particularly sensitive to our divestment program and may be impacted by changes in timing of transactions. Let's turn to slide 14 and our sources and uses. When we look at our funding composition towards 2030, the reduction in our future expected build-out as well as our investment program ensure that we continue to have a fully self-funded plan. To fund our investment program of 210 to 230 billion, the largest contributor remains anchored in the strong and stable cash flow generation from our operational portfolio, contributing to more than half of our funding needs. Funding from partnership and divestment program will make up around 30%, reflecting a sizable share as well. It is planned to be more front-end loaded and is an element of our funding program that we consistently have shown over the years that we can deliver on, also with our 24 divestments in mind. The final two components are our tax equity funding as well as the debt and hybrids. When we look at our tax equity funding, the majority of this is expected to come from our revolution and sunrise wind projects. The net issuance of debt hybrid will also remain limited as we progress over the coming years. On the user side, we have strong visibility on the gross investments as we are constructing an advancing renewable portfolio of more than 9 gigawatts. In addition to this, we have some hybrid coupons as well as minority dividends payments that we are planning to undertake. With the measures we have taken to ensure focus on the improvement of our credit metrics, we have a headroom in our funding plan to strengthen our capital structure. So let's go to slide 15 and our divestment program. During 24, we have delivered proceeds of around 22 billion, which was in line with our expectations and puts us on track to deliver on our target of proceeds of 70 to 80 billion for the period 2024 to 2026. As we said one year ago, we have a number of transactions in the market and the transactions announced during 24 is the testament to this. We continue to have a broad set of opportunities that we can bring to the market and ultimately progress with the transactions that are the most attractive to us. When evaluating the attractiveness of the transaction, we do such based on three non-prioritized criteria, which are value creation, capital recycling, as well as risk diversification. With the conditions for divestments are different compared to years ago, we do see benefits from our experience within the farm down market that we have accumulated through frequent engagement for more than two decades. And we continue to see a sufficient appetite in the market, particularly for high quality assets. Over the coming two years, we anticipate to deliver the remainder of our targeted proceeds, while we continue to assume a relative balance split of proceeds across the three years. It will ultimately come down to the timing of transaction, which can shift the distribution of the proceeds between the calendar years. Let's turn to slide 16 and our capital structure. Throughout 24, we have taken a number of steps to support the trajectory of strengthening our capital structure and ensuring a solid investment grade rating. First, we managed to settle contracts related to Ocean Wind 1 at a better than assumed terms, such that we have preserved more than 7 billion in 24. which would have had an FFO as well as net debt impact. We have also introduced a reduction in our development expenses through market prioritizations, which will lead to a reduction of 3 billion towards 2026. And we continue to progress this number. Furthermore, we have succeeded in reducing our cost base on a like-for-like basis by 1 billion through simplification and efficiency increases. Finally, we have so far delivered on our targets for our divestment program, where we have secured proceeds of 22 billion during 2024 and remain on track to secure in the range of 50 to 60 billion over the coming two years. However, following the recent adverse developments in our U.S. offshore portfolio, we have seen further pressure to our credit metric in the short term. In addition to progressing what we already have initiated, we are taking further measures to strengthen our balance sheet. In short, this includes a reduction in our investment program and introducing new additional cost efficiency measures. Turning to our credit metric, we ended the year at 13%. This is better than we assumed a year ago, given that we have reached settlements on the contracts relating to Ocean Wind 1 at better than assumed terms. During 24, we have paid off 6.3 billion of cancellation fees, And if you remove the impact of this had to our credit metrics for the year, the number would have been around 22%. Looking at our short-term credit metric projections, we do see that the recent adverse development within our U.S. offshore portfolio impact put pressure on our credit metric in the short term. As such, the improvement of our credit metric will be slower than we previously assumed, but we still remain on track to deliver on the trajectory towards the FFO to net debt of 30%. We have taken note of recent rating agency decisions following our impairment announcement earlier in January and our swift reaction to mitigate the pressure on our balance sheet and the additional levers we have available is how we signal very clearly that we are serious about our rating commitments and the trajectory of improving our capital structure. even as it requires more of us compared to our expectations a year ago. So with that, let's go to the Q&A session.

speaker
Moderator
Conference Operator

Ladies and gentlemen, this concludes the presentation and we will now open up for questions. This call will have to end no later than 15.30. Please respect only one question per participant and then go back to the queue for a second question. Anyone who wishes to ask a question may press star followed by one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the queue, you can press star and two. Questioners on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Harry Wybert from BNB Paribas. Please go ahead.

speaker
Harry Wybert
Analyst, BNP Paribas

Hi, thank you very much. And firstly, congratulations to Rasmus. And also, assuming you might be listening, all the very best to Mads as well. And thank you for your stoicism over the last few years. So the question is a very high level one for Rasmus. And it is, do you think this is enough? And I'll ask that from two perspectives. So firstly, is there enough of a buffer here? if anything else goes wrong, so loss of bonus hours in the U.S., et cetera? And then secondly, is this enough of a growth proposition, given that you've discontinued your 2030 targets? And would you, for instance, consider coming back maybe in the summer or the autumn with, I guess, a CMD Also, this is a new investment plan, given that presumably you didn't have a huge amount of time to put the current plan together since the earlier write-downs a few weeks ago. Thank you.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you, Harry, and thank you very much. So two parts to your question. Is there enough buffer in the plan? And secondly, is there enough growth in the plan? So as per the buffer, we are today presenting a fully self-funded plan, and we do believe that it is indeed sufficiently robust. There is no doubt that we have seen increased pressure on our metrics and obviously in particular due to the recent events in the US, first on the revolution wind and then sunrise as we communicated in Q3 and then a couple of weeks ago. We have been through both projects quite diligently, obviously. We have re-based the schedule. We have re-based the CAPEX. And based on what we know today, we have a good feeling about those projects. Overall, obviously, when you are constructing a construction program of 8.4 gigawatts of offshore wind, I cannot sit here today and say that there are no risks associated with that. Of course, there are. But what I can tell you, Harry, is that that will be our number one priority to deliver on that construction program in the next three years and everything we do. And by doing so, we also believe that we today are presenting a robust plan. As for the growth part of your question, you are right that we have downwards adjusted our CAPEX projections towards 2030 today. But bear in mind a couple of things. First of all, by delivering on our construction program now, especially on the offshore side, we will be almost doubling our offshore capacity towards the back end of 2027. That is to me a very meaningful growth. And it is something that will, in our view, absolutely solidify our position as the undisputed global leader in offshore wind. And then as for additional opportunities in our portfolio, as we also have communicated today, we have 40 to 60 billion DKK of uncommitted capital available towards 2030. And we do believe that that is to us a very meaningful amount. and something we will now sort of use in the absolute best investment propositions that lands on our table, and be very financially disciplined in the way we decide to allocate that capital.

speaker
Harry Wybert
Analyst, BNP Paribas

Okay, thank you very much.

speaker
Moderator
Conference Operator

The next question comes from the line of Christian Torner from SCB. Please go ahead.

speaker
Christian Torner
Analyst, SCB

Yes, thank you. So somewhat similar question. So the 20 billion range you are indicating for your investment program, the 210 to 230, should that be viewed as your buffer here? So, I mean, say the bonus adders are removed, which according to your impairment notice, a bit more than 5 billion, then it sort of takes 5 billion away from the spread. Is that the right way to think about it?

speaker
Rasmus Erbel
CEO, Ørsted

Hi, Christian. I don't think about it like that. I don't think about it like that. I think what you need to take away from the numbers is the fact that out of the 210 to 230, 130 of them are committed. And then 43 billion spent in 2024. And then there is something left, which is the 40 to 60. And that is where we see the range in our view. So that is the way to... to think about it. And then specifically on your point on the energy communities, 10% that we have, We have based our investment decisions on current valid treasury guidance, and we do find it unlikely that changes with retrospective effect will be entered into with respect to our energy communities 10 percent. You really need to differentiate between assets under construction and then development. But again, like we've done before, we have been very explicit in our annual account, in the notes, on exactly what would the implications be of us not having those 10% energy communities, and that is the 5.3 billion.

speaker
Christian Torner
Analyst, SCB

Understood. I guess I could have asked in a different way. I mean, would you be able to go higher than the 230 billion? or if anything happens for whatever reasons, would you have to sort of offset it and sort of remain no higher than the 230?

speaker
Rasmus Erbel
CEO, Ørsted

We believe that an investment plan towards 2030 between 210 and 230 is the right number for us. We believe that is a robust plan, and we believe that that is the right plan for us.

speaker
Christian Torner
Analyst, SCB

Fair enough.

speaker
Moderator
Conference Operator

Thank you. The next question comes from the line of Peter Bittsteiger from Bank of America. Please go ahead.

speaker
Peter Bittsteiger
Analyst, Bank of America

Yeah, hi. Thank you for taking my question. You talk a lot about cost pressures that have caused your credit metrics to deteriorate. Obviously, we're aware of the $4 billion cost overrun at Sunrise Wind, but the CapEx inflation that you presented today is actually $30 billion. versus the, you know, approximately versus the 270 billion capex plan that you've had until now. So just trying to square where the other 25 billion has come from and why that wasn't disclosed before today, because, you know, your Q3 slides still show that 270 billion. And also in terms of your credit metric deterioration, how much of that also comes from OPEX costs being higher than anticipated? Thank you.

speaker
Rasmus Erbel
CEO, Ørsted

I suggest I take the first part on the cost pressures and then leave it for you, Trond, on the OPEX, on the credit metrics. So, Peter, your question on sort of where does the $30 billion of additional gross investment come from is, of course, I fully understand. The way to think about it is that on a... On a like-for-like basis, since the CMU update we did in February, we have seen capex increases from our U.S. projects of roughly half of that amount, a little bit more. The remainder of the $30 billion, the vast majority of the remainder of the 30 billion is capex related to uncommitted projects at the time. So that is our expectations of the projects that we have in our portfolio that are not committed as of now and also were not at the time. how much we believe that they would have gone up. So I think that is the best way to think about the 30 billion. And then on the second part, Trond...

speaker
John Wesley
CFO, Ørsted

Yeah, on the cost increases in 2025, it's more about the allocation on what is capitalized and not, which is driving the majority of that. So our total cash out will be reduced, as I said, on the defects previously. And there are some elements of not repeated compensations from 24 that comes into that element as well.

speaker
Peter Bittsteiger
Analyst, Bank of America

Okay, that's clear. Thank you.

speaker
Moderator
Conference Operator

The next question comes from the line of Alberto Giandolfi from Goldman Sachs. Please go ahead.

speaker
Alberto Giandolfi
Analyst, Goldman Sachs

Oh, thank you. Hi, Salberto Gandolfi. I have a question that is in two parts as well. The first one is, well, first of all, let me congratulate you, Rasmussen, for your lucky manners and for being very brave and reducing capex, which I personally believe is the right thing to do. But the question about this, we're always thinking two, three steps ahead right here. And I was thinking that with potential in the medium term, power prices coming down, some contracts expiring. Is there a risk in a renewable business like this that when you take CapEx down, your medium-term profits at some point begin to plateau? So is there a risk that your 2030 net income, not EBITDA, is actually very similar to what you're going to see in 2026? Because, you know, fixed costs continue to go up and your margins are coming down. So I guess the question is, what's the priority here? Here, you know, beyond that level, do you think at that point your FFO to net debt will be in check so that, you know, if the market rewards growth, you're going to start to increase investments? Or do you think that the effort on the debt will be in an acceptable level, meaning going back to about 30% much later in the decade, so we should not expect any optionality on growth before maybe much later in the decade? Thank you so much.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you, Alberto. So I think I understand the question. So... First of all, on the power prices and on the sensitivities to our earnings and our FFO and thereby our FFOTONET debt, just reminding you about that an important part of our value proposition in Ørsted is that we are… that we have roughly 80% of contracted revenue in our business. And we don't specifically guide on that, as you know, but we do expect that that proportion will be roughly the same towards the back end of 2020. of the decade. And then it's not for me today to sort of be very specific or speculate in our FFO to net debt levels. We have, Antoine has been quite clear about our expectations in the short term. But it is not for us to speculate in the longer term. And then, of course, the last point I would like to make in terms of our, you can say, profitability also in the back end of the decade, a point that I have made before that that right now we are, as said, we are constructing 8.4 gigawatts. And as I'm sure you can appreciate, that is not our expectation for our future construction levels, also towards the back end of the decade with the projections that we have shared today. That obviously also means that we will look into our costs and the rightsizing of our organization, especially towards the back end of the decade when we have delivered on our execution program. That will also have implications on our numbers.

speaker
Moderator
Conference Operator

Thank you so much. The next question comes from the line of Kastor Blom from Danske Bank. Please go ahead.

speaker
Kastor Blom
Analyst, Danske Bank

Thanks a lot. And also congrats from my side to your reference. I would like to ask on the 40 to 60 billion of available funds that you have not committed as of now. Obviously, there's a whole C4 that could be an opportunity, but could we also see you you know, thinking a little bit out of the box here. Could it also be that you could see opportunities of consolidating stuff here? Could it be that it would all end up going into onshore because that's where you see the opportunities? I heard you sort of on the call being very clear in saying that it comes down to value generation, but just sort of trying to understand, you know, how far you would take that given... that you still have sort of a legacy of being an offshore wind developer. I hope you sort of understand where I'm heading a little bit. A little bit sort of talking to the strategy of sticking to being a developer of offshore wind and then afterwards trying to sell some of that development or whether you would be more opportunistic in terms of just searching to where the value lies.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you, Casper. So Horn C4, consolidation and onshore. So on Horn C4, first and foremost, of course, we fully appreciate that that is a very big and very important project. We remain pleased with the outcome of AR6 last year, and we are right now, as we speak, moving the project forward towards a potential FID. If we take FID, we will do it very likely throughout 2025, simply because of the regulation in the in the UK, where you have to meet your milestone delivery date in the beginning of 26, 18 months after award. We will obviously not be moving that project through an FID if we are not fully comfortable with the value creation of the project. It is value over volume for us, and that will clearly also be the case for Horn C4. That being said, the reason we are sort of happy with the opportunity still is also clearly due to the fact that if there is any way in the world where a project of that scale makes sense for us, it is in the UK. And if there is any place in the UK, it is in the Horn Sea zone. So we are moving that project forward. It's a big project, so we will carefully consider. With respect to sort of your point on sort of can you – what can you do with the money or so as I hear you, so we will first and foremost prioritize the most financially attractive opportunities. in the regions where we are, but also with a strategic emphasis on offshore wind. This is, in our view, where we have the most distinct competitive differentiation and also the most unique capabilities in many ways across the full lifecycle development, construction and operations. We remain committed, as I said, to onshore wind, solar, battery, and carbon capture. And we will, as I said, move the best project forward. But, of course, offshore wind is where we historically have deployed the vast majority of our capital. That will also be the case going forward. In terms of consolidation in the industry, I don't think that is needed for me to speculate about that today.

speaker
Kastor Blom
Analyst, Danske Bank

Fair enough. Thanks a lot, Rasmus.

speaker
Moderator
Conference Operator

The next question comes from the line of Rob Polny from Morgan Stanley.

speaker
Rob Polny
Analyst, Morgan Stanley

Please go ahead. Hi. Good afternoon, everyone. Yes, congratulations, Rasmus, on the new role, and good luck. So there are lots of questions. Can I just pick up on the Horn C4 one, please? Because I'm still a bit confused here. On the previous answer, you said you're pleased with the outcome. You're moving to FID, but you seem to be questioning the value creation. And obviously, you have a double-edged inflation link, CFD. So why is this questionable? If I may say, it sounds like CapEx was higher than anticipated, given a previous answer. And given you mentioned you were going to be more transparent on projects, would you mind advising sort of where the CapEx would be for this project and whether it would be covered by that 40 to 60 billion of uncommitted CapEx sort of multi-part question on the Horn C4? Thank you very much.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you, Rob. So the last part of your question, yes, the Horn C4 would be one of the projects that would be part of the uncommitted capital of 40 to 60 billion Danish. In terms of your comments on the value, I would not say that it is questionable. That was not my intent at least. What I would say is that this is a very attractive project for us. But an FID really means something. That's the point in time where you commit for the long run. And obviously right now, while we, of course, as part of the bid, had matured the case as much as makes sense, what we are, of course, doing now is sort of further maturing the case and also talking to select key suppliers, et cetera, basically firming up the case towards an FID agreement. And before that work is done and before Trond and I have been through every detail of a case like that, it is not prudent for me to be very bullish on whether or not we take an FID. Nothing has changed, if you will, since we bid the case. And then specifically on your point on CAPEX, I don't want to disclose our specific CAPEX projections for Horn C4 at this stage. But, of course, I'm sure you can find some relevant benchmarks in the Horn C zone.

speaker
Rob Polny
Analyst, Morgan Stanley

Thank you.

speaker
Moderator
Conference Operator

I'll tell you later. The next question comes from the line of Jenny Ping from Citi. Please go ahead, ma'am.

speaker
Jenny Ping
Analyst, Citi

Thank you very much. I've got a couple of questions on slide 14, please. So just looking at the sources of funds, I just wanted to ask the following. One, with regards to hybrids, what sort of conversation have you had with the rating agencies? Because 7.5% of $220 billion seems like a big number in terms of your hybrid capacity. Is that something that you've already had confirmation from rating agencies that they would allow. Secondly, just on the tax equity piece, we already sort of touched on that in terms of your expectations of the IRS allowance. But when do you expect to get the cash for it? And then thirdly, just on partnership and divestments, if you can give us – any more granularity around which assets that you are looking to sell above and beyond what's already been said in the past, that would be helpful. Thank you.

speaker
John Wesley
CFO, Ørsted

When it comes to the hybrid part of the 50%, the cap of hybrid is really, it's basically 50% of the top-level capitalization. So in that regard, I think the sort of the clearing path is very clear, to put it this way. So in that sense, and as I said, it's a piece of the funding plans going forward, but it's not a big piece of the funding plans going forward. When it comes to the tax equity part, the timing of that credit is really on the commissioning of the project. So that's the timing of the tax equity.

speaker
Moderator
Conference Operator

The next question comes from the line of Deepa Venkaswaran from Bernstein. Please go ahead.

speaker
Deepa Venkaswaran
Analyst, Bernstein

Thank you so much, and congratulations, Rasmus. So my question is how you've adapted the near-term numbers, right? So the CAPEX card, it seems, is more back-end loaded. So what I wanted to understand is you've had this delay and sunrise when there is a higher cost. but it doesn't seem like your capex for the 24, sorry, 25, 26, 27 has changed. So just wondering what you're doing to get the metric back to that 30% FFO to net debt by 26 in your chart. And can I also, as part of the divestment program, confirm what your assumptions on sunrise wind is and, you know, whether that risk has been factored in?

speaker
John Wesley
CFO, Ørsted

On the FFO part, I do think that the path forward to that is really to go on and say that we are assuming the farm downs being spread out for both 25 and 26 in sort of an even rate. In addition to that, if you take the FFO of 24 and add on the cancellation payments to and then some additional cost efficiency measures going in both for 2025 and 2026 and 2027, I would believe that you're going to get very close to the 30% FFO, the net debt level. On the second part, I forgot that. Can you repeat, please?

speaker
Deepa Venkaswaran
Analyst, Bernstein

Just what's the assumption? Yeah, what's the assumption on the sunrise wind farm down in your plan that you presented today? When is that happening?

speaker
John Wesley
CFO, Ørsted

Sorry about that. And as we've been talking about before, we are not saying anything about specific farm downs or specific assets that we have in the market and we are working on. But our modus operandi and our business plan is, of course, the ordinary one to own 50% of our assets. And that, of course, is going to include the 100% ownership we have on the projects that we are running. So in that sense, but the timing of such, we have not been very clear about.

speaker
Deepa Venkaswaran
Analyst, Bernstein

But have you factored any risks of any delays if something like Sunrise Wind was included in your new plan?

speaker
John Wesley
CFO, Ørsted

When it comes to – the answer is that is, of course, yes. We have factored in certain elements of delays in the farm downs, but that is not sort of in the effect of the actual – it's more a capital availability element than sort of a net debt element that we're looking at. Thank you.

speaker
Moderator
Conference Operator

The next question comes from the line of Odi Jeffrey from Deutsche Bank. Please go ahead.

speaker
Odi Jeffrey
Analyst, Deutsche Bank

Thank you. It's a follow-up on the Sunrise project. I just want to get your sense of how confident you are that you could sell a project like Sunrise ahead of its commissioning date, in the second half of 2027, given the complications that there have been with the project. So how confident are you that you could sell that? And then also just on the U.S. projects, Revolution and Sunrise, do you feel that the U.S. supply chain for the continued construction of those projects could be compromised by a lack of demand from further build-out of other offshore wind projects this decade? And if you think it's robust, why do you think that supply chain will be robust? Thank you.

speaker
John Wesley
CFO, Ørsted

When it comes to the farm down, we have a long experience on making sure that we have good partnerships and investors in assets in different parts. So in that sense, of course, we are sort of pre-wiring this in the market. We are talking to investors all the time. Having said that, we, of course, are... We are aware and see that the market has changed the last year. And I think we've been talking about that, that it's more assets out for sale now than it has been for quite some time. Having said that, we are still sort of good on investor interest in the farm downs that we are working on with right now.

speaker
Rasmus Erbel
CEO, Ørsted

And if I can take the supply chain point highly. So I think two points to the question. First, specifically on revolution wind and sunrise, it is predominantly a European supply chain delivering on the projects, of course, with elements of local presence. But no, we don't see any... implications whatsoever on the supply chain of those two projects of, you can say, the current uncertainty in the market. Of course, when you look at US offshore wind going forward, we are, of course, sort of carefully following the market right now, and we, of course, see some some colleagues moving forward with projects and also a couple of colleagues stepping away from projects. And I said we are firmly committed to moving forward revolution, wind and sunrise, but of course everything on the other side of that we will carefully consider. And, of course, over time, if that trend continues, that could, of course, have an implication on the supply chain in the U.S., but I think it is too soon to have a firm view about that.

speaker
Moderator
Conference Operator

Thank you. The next question comes from the line of Mark Fresheny from UBS. Please go ahead.

speaker
Mark Fresheny
Analyst, UBS

Hello. Thank you for taking my question. Rasmus, when you presented a year ago, you pointed out that Horn Z3, which is the material farm down because the capex is so high, you gave some extra colour around that, which I recall was expecting to have that farm down done in Q1 2025. I was just wondering what the expected... time is. And if I think back to your, you know, when I think you and your colleagues presented many years ago and you justified why you didn't use project finance and you use 50% farm downs and equity funded. I mean, surely there are other solutions to extracting capital from projects, as you saw with the Brookfield deal. So can we expect you potentially to look at other ways of structuring transactions other than selling large equity interests, for example, project finance. Thank you.

speaker
John Wesley
CFO, Ørsted

It's my turf to talk about the farm downs now, Mark. So when it comes to the timing of the Hornsey 3, of course, it is a big project. And as a result of that, as we said last year, we are working on the farm down during the 25th. And that is still ongoing. So the timeline internally has not really slipped. And there is no recollection here that we said the first quarter last year, this year, but we said during 25. And as such, when it comes to the structure of these transactions and availability of cash, Going forward, we are looking at farm downs as the sort of the most significant part of the funding coming from the proceeds. And then, of course, it's going to be partly some other assets, some smaller assets in there to up the number to get to the proceeds that we need to reach. But other than that, we haven't really looked at other types of structuring funding for these projects.

speaker
Mark Fresheny
Analyst, UBS

Thank you.

speaker
Moderator
Conference Operator

The next question comes from the line of Dominic Nash from Barclays.

speaker
Dominic Nash
Analyst, Barclays

Please go ahead. Yes, good afternoon, and thanks for taking this question, and at risk of probably laboring a point here. Let's go through these numbers. I think that Jenny started them on slide 14, and I don't think you answered her third point, which is we've got 30% of your gross needs coming from farm downs and disposals, and that's probably, what, $250 billion in total. So 30% of that is $75. And could you just confirm to us that you – and that's the 2030 – But you still have a target of 70 to 80 billion of proceeds between 24 and 26. So am I getting this one right or wrong, which is basically what you're saying is that everything you do in 24, 26 is essentially the whole farm down out to the end of the decade. And secondly, on this, on the secondary market, can you give some colour on how the secondary market is going now? Is it a buyer's market, is it a seller's market at the moment, and whether your buyers are more inclined for the best price to get on post-commissioning or pre-commissioning, please? Thank you.

speaker
John Wesley
CFO, Ørsted

On the logic, yes, it's true that most of our farm downs and proceeds will happen until 26. And from then on, it's of course going to be more limited and more marginal as we see it now. Then again, the precision of 27 to 30 is then not sort of as precise as the 27 targets or the job that we need to do to 27. So that is correct. When it comes to the market as such, it is a buyer's market out there on the asset side. We see that on the interest or the return requirements from the buyers. It is, as you've seen in the markets both the last few weeks as well as you saw both in the third and fourth quarter last year, you saw that there were more assets coming into the market, more projects coming into market for either de-risking or for selling. So in that sense, it's absolutely a biased market out there. Having said that, there is, as we see it, still a good interest for high-quality assets with a high-quality operator. And we do think that, as I said, we have good tractions on the farm downs as we are progressing those as we speak, really.

speaker
Moderator
Conference Operator

Okay, thank you very much. The next question comes from the line of Helene Kilvaug Brombo from BNP Markets. Please go ahead.

speaker
Helene Kilvaug Brombo
Analyst, BNP Markets

Yes, hello, and thank you for taking my question. I was just wondering if you could walk us through what steps are remaining before you get your energy community bonus tax credits for Revolution and Sunrise, and by when would you have expected to get those subsidies?

speaker
Rasmus Erbel
CEO, Ørsted

Hi, Helene Rasmus here. Thank you very much for the question. So sort of in terms of the steps, I think what the important thing to take away is that we have based our investment decision on the current valid treasury guidance. So therefore, we are basically working towards that We will just continue our normal course with our energy community. So at such, there are no, you can say, specific steps that we need to adhere to going forward. both with respect to Revolution Wind and Sunrise. Of course, on the monetization of the tax credits, that's, of course, what you are then working on, as Trond also said before, between now and COD for both projects. where we, of course, are further progressed on Revolution Wind, where we are, you can say, in the market, also because Revolution Wind is on a more progressed timeline than Sunrise, with an expected COD at the back end of 26 for Revolution and the back end of 27 for Sunrise.

speaker
Helene Kilvaug Brombo
Analyst, BNP Markets

And when will you sort of get the final approval from U.S. government that you will get those for sure? Do you have 95 percent probability?

speaker
John Wesley
CFO, Ørsted

Well, it's a process in the U.S. I'm not quite sure on the actual practical steps, but I do think it actually applies. After commissioning, you actually do a tax return, and then you get some credits. But I have to refer that sort of administrative understanding question to IR afterwards.

speaker
Helene Kilvaug Brombo
Analyst, BNP Markets

Okay. Thank you.

speaker
Moderator
Conference Operator

The next question comes from the line of David Pass from Wolfer Research. Please go ahead.

speaker
David Pass
Analyst, Wolfer Research

Hi. Thanks for the time. Just had a question on revolution. Can you please describe the move to the second half of 26 from 2026 in your last slide? Just maybe describe the process from end of construction in May 25 to commission in the second half of 26. Thank you.

speaker
Rasmus Erbel
CEO, Ørsted

Yes, absolutely. So the key driver behind that change in the timeline, as you are alluding to, is the completion of the onshore substation in the Eversource scope. That has been the key driver where we have added roughly 12 months to our schedule. and delayed COD to the back end of 2026. The Eversource scope is progressing according to plan. We are obviously following it very, very closely. It is on the critical path, but again, moving forward according to plan, and that is the key driver behind the change in schedule.

speaker
David Pass
Analyst, Wolfer Research

Got it. Thank you.

speaker
Moderator
Conference Operator

Next question is a follow-up from Peter Biska from Bank of America. Please go ahead.

speaker
Peter Bittsteiger
Analyst, Bank of America

Yeah, hi. Just a few questions about the timing of sunrise, wind, and various aspects of that. I'm not sure if you've – excuse me if I've missed it, but I'm not sure if you've actually sort of addressed whether your current – efforts to shore up your capital structure are going to be sufficient in the possible scenario that you can't sell it for whatever reason. So could you clarify that, please?

speaker
John Wesley
CFO, Ørsted

When it comes to the planning and the farm downs and the 30% funding part, as we said, we have several alternatives in the portfolio. But as I've said earlier, the element is, of course, that our motto as a brand is to get down to 50% of 100% assets. And therefore, that's still our aim and our goal. When it comes to the contingency elements and how we're going to run uh the alternatives if in case any of the assets is not going to be able to farm down that is of course catered within sort of the contingency measures that we have um but other than that i cannot comment to that any more than that okay the next question is a follow-up from rob colony from morgan stanley please go ahead

speaker
Rob Polny
Analyst, Morgan Stanley

Hi, thanks. Just following up on the U.S. and continuing the last question, it hasn't been asked, I think. How seriously do you consider some of the stated risks in the U.S. regarding potential revocation of your acreage and or permits for Sunrise and Revolution to progress? That does the first follow up. But secondly, I think a bit conceptual, there's lots of questions on farm downs, but it sounds like you've got lots of multiple assets out there in the market to try and get the proceeds desired. And so conceptually. The UK bundle sale of high-return operating projects you did in October, is that a needs-must event to help the balance sheet, fire sale, if you will? Or is this something the market should become more used to for a variety of reasons that the 50% sell-down preference just isn't adequate anymore? And lastly, and high-level, just one for Rasmus, very high level, what would you do differently to the previous management given the challenges of which you've inherited? Thank you very much.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you very much, Rob. Three questions. I will take the first and the third. So with respect to the US, and I understand your question sort of being around current sort of the political and regulatory environment. So we are very closely following all relevant policy developments in the U.S. and of course have been for a very long time. And what we are doing right now is that we are reviewing the executive order on wind energy that came out in the 20th. And then we are, as I said earlier on the call, awaiting cabinet secretaries to take office, which is happening as we speak. So, as you know, Doc Burgum has been stated as the Secretary of Interior and Chris Wright as the Secretary of Energy. And, of course, we are now waiting for sort of the view on how to implement this order. That's a more general comment because I think you really truly need to differentiate here between, as I've said, assets under construction and then future development. So as for specifically Revolution and Sunrise, remember these are active in construction and we are fully committed to moving them forward with these projects and deliver on our commitments. So therefore, we do not expect that the executive order will have any implications on on assets under construction, but of course for assets under development it's potentially a different situation. Then as for the last question, it doesn't feel right for me today to go into details about what I will do different than previous management. Mads and I are two different persons. We have two different backgrounds, but we have a shared passion for the green transition and I have enjoyed working with Mads. So, I will leave it at that for now, and then you can be rest assured that going forward, I will do my absolute utmost to deliver on the priorities that we have put forward in the adjusted CMU today.

speaker
John Wesley
CFO, Ørsted

On the farm down question, going forward, I do think that you will see us more coming back to the ordinary business model of ordinary farm downs to 50%. and see the Macaulay transaction or the UK minority transaction as not necessarily a one-off, but not a significant element of proceeds going forward.

speaker
Rob Polny
Analyst, Morgan Stanley

That's very clear. Thank you, guys.

speaker
Moderator
Conference Operator

The next and last question comes from the line of Jenny Ping from Citi. Please go ahead.

speaker
Jenny Ping
Analyst, Citi

Hi, thanks very much. Sorry, I got cut off earlier on my last question. So the 15%, just going back to the hybrids, the 15% threshold, from what I can see, you're already close to that. So again, just checking, you really do have 2.2 billion euros worth of capacity as per your slide 14 to issue hybrids. And then secondly, slightly differently, just on going back to CapEx, Rasmus, thank you for the explanation on the 30 billion difference. But looking at it a slightly different way, looking at offshore specifically, if I take off. at the 40 to 60 billion, which most of it sounds like Hornsea 4 and Baltica 3, away from the 180 that was there before. Your starting point on a like-for-like basis is really 130 compared to the 173 that you talk about minus the seven of onshore in 2024 so that's actually a 20 plus percent increase in the underlying offshore capex can you shed a bit of light around that whether that calculation is correct or if there's any further adjustment that's needed thank you very much

speaker
John Wesley
CFO, Ørsted

When it comes to the hybrid part, we're at 13.6% at year end. So you're right, we're close. And as I said earlier, hybrid is not a significant part in our funding plans going forward. And to the other questions, if Rosmus managed to follow your numbers.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you. Thank you, Trond. Hi again, Jenny. So, no, you shouldn't read it like that. So, first of all, remember that Baltica 3, as an example that you are alluding to, as we have said before, is sort of a project under reconfiguration that we will only, again, also move forward if we can can find a way to make the business case stack up in a very robust manner. So we have not intended to provide any specific different capital allocation split between our technologies in the 40 to 60 billion that we have in the uncommitted capital. So I think the starting point is the comment that I made earlier today about our continued commitment to offshore as where we will deploy the vast, vast majority of our capital.

speaker
Jenny Ping
Analyst, Citi

Thank you.

speaker
Moderator
Conference Operator

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to CEO Rasmus Erbo for any closing remarks.

speaker
Rasmus Erbel
CEO, Ørsted

Thank you all very much for joining. Appreciate the interaction. Appreciate the interest. And as always, if you have any further questions, please do not hesitate to reach out and our IR team will be here to answer them. As for myself and Antoine, we look very much forward to continuing the dialogue with you all on the road. Thank you. Stay safe and have a great day.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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