Offshore Wind in Turmoil: Is U.S. Policy Blowing Ørsted Off Course?

Ørsted has warned that recent regulatory changes in the United States could slow the growth of offshore wind, increase energy costs, and alter investment priorities. The concern comes as key tax credits are set to begin phasing out in 2027.

In its second-quarter 2025 investor presentation, the company pointed to what it described as “material adverse developments” in the US regulatory landscape, stating that these have increased the perceived risk of offshore wind projects in the country.

While the sector still has strong long-term growth potential, Ørsted says shifting regulations and a more demanding financing environment are creating immediate hurdles. The company noted that the US has seen “unprecedented adverse regulatory developments” that have made investors more cautious about backing offshore wind.

One major casualty of these changes is the planned sale of a partial equity stake in the 924 megawatt Sunrise Wind project off New York, along with the non-recourse financing that would have supported it. These deals had been central to Ørsted’s fully funded business plan, but the current market conditions have made them unworkable.

With those options off the table, Ørsted will now take full ownership of Sunrise Wind. This decision requires an additional 40 billion Danish kroner, or approximately $ 6.3 billion, in funding between 2025 and 2027. It also means more capital expenditure over a longer timeframe, and greater reliance on the company’s balance sheet rather than external project financing.

To fill the funding gap, Ørsted plans to raise 60 billion Danish kroner, approximately $ 9.4 billion, through a rights issue. The Danish State, as the majority shareholder, is backing the move. The company states that the new capital will help maintain a strong investment-grade credit rating, provide more flexibility in timing partnerships and asset sales, and safeguard long-term operational cash flow.

The shift in US conditions has also prompted Ørsted to rethink its wider strategy. The company is scaling back further development in the United States and focusing instead on its core European markets and selected Asia-Pacific opportunities. The US onshore business will operate as an independent unit. Ørsted’s investment approach is now prioritising value over volume, aiming for returns of 150 to 300 basis points above its weighted average cost of capital at the point of investment.

The policy backdrop is also changing. On July 4, 2025, President Donald Trump signed the “One Big Beautiful Bill Act,” which rolls back several clean energy measures from the Inflation Reduction Act and boosts support for fossil fuels. For wind power, the legislation brings a sharp phase-out of tax credits beginning in 2027. Production and investment tax credits will only be available to projects starting before the end of 2025 or meeting strict operational deadlines.

Researchers at Princeton University warn that the rollback could result in 70 gigawatts less wind and solar capacity by 2030. They estimate it could raise the average US household’s annual energy bill by $165 and reduce the projected national emissions cut from 40 per cent to just 3 per cent.

The changes could also create uncertainty for developers, shortening project timelines, tightening supply chain compliance rules under the Foreign Entity of Concern designation, and potentially slowing both offshore and onshore wind expansion at a crucial moment for climate goals.

Despite the headwinds, Ørsted continues to invest in the US workforce development. In 2024, its training programme helped 335 union workers in Rhode Island, New York, and Connecticut gain offshore wind credentials. The company says this strengthens the domestic supply chain and creates local jobs.

For now, the US still represents a market with significant long-term potential for offshore wind, but Ørsted’s latest moves show that the road ahead may be far more complicated than once expected.