High energy prices have been a positive development in several areas of business for Ørsted, which Thursday morning upgraded its full-year financial guidance when presenting its second-quarter interim report.
But while elevated prices have benefited the power plant business of the Bioenergy and Onshore divisions, high volatility has negatively impacted Ørsted’s largest business leg, Offshore.
Generally speaking, though, Chief Executive Mads Nipper is quite satisfied.
”We’re seeing a mix of a quarter – and thereby also a half-year – that’s financially strong, with some of our businesses performing incredibly well, where we will once again have to review the totality of our business,” Nipper tells MarketWire.
”We know, and particularly in the situation we find our offshore business in, that when power prices are this high and volatile, we tend to not have very significant gains from it because we have locked a large proportion of our earnings inside Offshore,” the CEO continues.
The unstable and elevated power prices have increased Ørsted’s balancing costs in the Offshore division, and results have also been dampened by what Ørsted itself calls ”ineffective hedges.”
Nipper says these ineffective hedges are an indication that, in principle, more power was sold than what was generated in the end, which has proven expensive for the company in light of the major price hikes.
”We’re satisfied with the total, but there are lots of moving parts that we don’t worry about at all in the long term. In fact, we have sold 32% more power in Offshore in Q2 than last year. That’s what’s important – we just have to include some effects that are due to market conditions,” Nipper says.
Moreover, he points out that the losses are being booked now due to the company’s accounting practice, but that the group shouldn’t realize a net loss in the long term.
”The quarter was affected, but we’re not worried,” the CEO says.