From Morningstar: 2024-06-18 04:32:00

Offshore wind projects are struggling due to soaring costs, impacting the climate change mitigation efforts and valuations of wind power companies. Wind turbine manufacturers are facing challenges restoring profitability from cost inflation, while wind is losing ground to solar in terms of growth. Despite challenges, opportunities lie in energy transition acceleration and high electricity demand from data centers.

Denmark’s Ørsted faced setbacks after cancelling projects in the US, leading to impairments and cancellation fees. The company had to suspend dividends and cut growth ambitions to fund future projects like the Hornsea 3. The upcoming US election could impact the wind sector, as Republican nominee Donald Trump vowed to end offshore wind development through executive order.

The wind sector is undervalued, with Ørsted leading the offshore wind sector but facing headwinds from rising costs. British energy company SSE is expected to see earnings growth from new wind capacity. Enel, an integrated utility in Europe and Latin America, faced challenges from energy crisis in 2021-23 but aims to shore up its balance sheet through asset sales. RWE, with a strong focus on wind and solar, became the fourth-largest renewables firm in the US after acquiring Consolidated Edison’s clean-energy business. Despite recent share price declines, RWE is viewed as undervalued and poised for a rerating.



Read more at Morningstar: Four Undervalued European Wind Energy Stocks