Ørsted Pays $1.7B For Sunrise Delays, Aviva Invests in CIC

In this News Flash, Ørsted pays $1.7B for delays and increased costs at their Sunrise Wind project, Aviva Investors invests €40 million in CIC, and Vibra acquires Comer Energia.

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Welcome to Uptime News Flash. Industry news, lightning fast. Your hosts, Allen Hall, Joel Saxum, and Phil Totaro, discuss the latest deals, mergers, and alliances that will shape the future of wind power. News Flash is brought to you by IntelStor. For market intelligence that generates revenue, visit www.intelstor.com.

Allen Hall: Well, starting off the week, Orsted has announced a significant setback, posting a 1. 7 billion dollar impairment charge for the fourth quarter of 2024 due to delays and increased costs at a Sunrise Wind Project near New York. The 924 megawatt project, located about 30 miles east of Montauk, around Long Island, faces construction challenges, particularly with monopile foundations.

Despite these difficulties, Orsted’s CEO, Mad Snipper, reaffirmed the company’s commitment to the U. S. market, though project completion has been pushed towards the second half of 2027, Phil. This is a big deal for Orsted. Orsted has been really profitable and a strong company for a long time, but these American projects are a real drag on their bottom line.

Phil Totaro: Absolutely. And I think they’re, they’re keen to get through all these things as quickly as they possibly can and, and also get to a point where they can, you know, have the project mature enough, either in construction or operation, where they can actually get an investor in. Which is what their original plan was with a lot of the utility companies in you know, Connecticut, Massachusetts, Rhode Island, New Jersey and New York, I suppose with some of the proposed projects.

And, and a lot of those utilities decided, you know what, not for us, taking too long, costing too much, and just not our cup of tea. So the quicker they can get this sunrise project done and move on to potentially others because they still have revolution that they’re trying to build as well. So

Joel Saxum: you

Phil Totaro: know, the quicker the better.

Joel Saxum: Frustrating thing here, I think on this project from someone who’s been watching these in my seat for a long time and knowing what the soil characteristics are out there. These things, these studies have been going on since 2016, 2017 on what the soil conditions are that these monopiles are gonna be driven into.

This should not be a problem they’re running into now. Now we know that there’s been a, it’s a weird. It’s like this quick, sandy, odd soil. We know that, but we’ve known it for like eight years. So, they should have come up with a solution for this beforehand. This shouldn’t be an impairment that they’re taking right now.

But, they are, and it’s reality. So, they’ll have to push through it

Allen Hall: to get this thing built in 2027. UK based Aviva Investors has made a 40 million euro investment in CIC, a German renewable energy developer focusing on northern and central Europe. Now, CIC specializes in onshore wind and solar projects, particularly in Poland and Sweden, and currently manages about one gigawatt’s worth of projects in various development stages.

Now, Phil, I know Northern Europe is making a big push at the minute to get invested into renewables altogether to get away from some of the natural gas problems that they have. This is another move by a strong player.

Phil Totaro: Well, and it’s a move by another UK investor into continental Europe. So this is follows on from, you know, moves by Brookfield that’s, you know, acquired some UK and, and European based companies and assets.

Octopus has made similar moves. Aviva being another, you know, UK investment management company is You know, they already own a small portfolio of, of projects and assets in the UK and Northern Ireland, and this is giving them the opportunity to branch out into continental Europe where, you know, as you said, the, the demand is really driving some of the growth.

And the good news, I guess, in Germany is that there’s been a significant amount of permitting through the end of 2024 that should give them a pretty decent build out pipeline for 2025 and, and beyond. So good timing and good move by Aviva.

Joel Saxum: Yeah, Aviva looking into, or helping out CIC here and looking into Poland and Sweden.

So Poland is, you know, an emerging market that has seen a lot of movement. Sweden is a market that’s growing fast, right? So one of the, some of the largest wind farms in Northern Europe all being built in Sweden. So there’s, this is a, it’s a play from Aviva. And most of the time when we talk on Newsflash about money going into things, it’s money for a big investment, for a pipeline, for development or something.

But when you look at 40 million euros, that’s not for a project. That’s to bolster the team. That’s to get the company healthy and support them in growth. And I’d like to see

Allen Hall: that. Down in beautiful Brazil, Brazil’s largest fuel and lubricant distributor, Vibra, has completed a strategic acquisition of Comer Energia, adding 2.

1 gigawatts of solar and wind capacity to its portfolio. The deal positions Vibra as Brazil’s largest multi energy platform and includes eight large scale solar parks, totaling 1. 5 gigawatts. Three wind farms with 280 megawatts of capacity and over 95 distributed solar plants. Phil, Lula in Brazil is a big proponent of renewable energy and is putting some limitations on the petroleum business.

It makes sense for Vibra, which has been in the petroleum business for a while, to take Get into renewables also.

Phil Totaro: And, and at this point, since they’re not doing a ton of new build on wind and even though they just approved offshore build out down there, that’s still a decade away from actually happening.

So the reality is there’s an opportunity for a lot of consolidation in the market, and this is, you know, one of the, the first deals you know, that Utility and an oil and gas, you know, focused company is, is making and I think there’s, there’s more that of that that can happen. Thankfully, because of the high capacity factors down in Brazil, you’ve got assets, which are, you know, Normally profitable more profitable than others because you, even though you might have a low PPA, you also have, you know, a capacity factor that might be like 60 percent or higher which is kind of obnoxious But it’s, you know, just the, the site conditions you’ve got down there.

So at the end of the day, I think it’s a, it’s a good move specifically for for Vibra to be able to do that. And in general, it’s. Kind of a wait and see measure for how the market’s going to evolve. You know, I guess it, it’s behooves a company like Vuber to have a pipeline and a portfolio of projects to be able to build out or repower, I suppose then, then just sit there waiting on the sidelines.

Joel Saxum: This is an interesting acquisition for me personally, and anybody that likes business to see someone that’s coming from a space that tru Traditionally competes with each other. Traditionally, you don’t see the, you know, lubricants fuels type company grabbing renewables and then joining up together. And when you see businesses do this, they can do it right or they can do it wrong.

So they do it right. They unlock all kinds of great synergies. They, they can mix cult, the, the company cultures together and create products. A very, very profitable organization. They can do it incorrectly and have inter fighting in competing because you have different, different thoughts and viewpoints and how the energy economy should look.

So I will watch this one personally, just because I like to see what’s going to happen internally in these companies and rooting for them for it to go well. Because I think there’s a lot of synergy that can be unlocked here.