This week on Uptime, we discuss Ørsted CEO Mads Nipper stepping down, Shell withdrawing from the Atlantic Shores offshore wind project, and a study showing only 15% of employees feel their managers are transparent about challenges in the workplace.
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You're listening to the Uptime Wind Energy Podcast, brought to you by BuildTurbines. com. Learn, train, and be a part of the clean energy revolution. Visit BuildTurbines. com today. Now here's your hosts, Allen Hall, Joel Saxom, Phil Totaro, and Rosemary Barnes.
Allen Hall: Danish Renewable Energy Company, Ørsted, announced a leadership change, with CEO Mad Snipper stepping down after four years at the helm.
Rasmus Erbo. Uh, the company's deputy CEO and chief commercial officer will take over as group president and CEO, uh, in February. Uh, the transition comes as Orsted adapts to evolving market conditions in the offshore wind sector. Now this, uh, I guess around the industry was expected news. Uh, if you had talked to somebody, uh, about offshore in the US, uh, they felt like what had happened over the last year or so was really rough on the leadership at Oersted, part of this too, guys, is that some of it is just happenstance, interest rates rising, the supply chain nightmares that were happening and Mads Knipper would just happen to be there at that specific time.
Is, is that the feeling like it was just bad timing, uh, for Mads?
Phil Totaro: Yeah, it's, it's part of it, but the, the reality I think is you, you've got a scenario where he, he was there and the buck stops here and all that sort of stuff, um, if you're the boss, but he also was one kind of overseeing a lot of the deals that got him put in place that led to all those impairments that they ended up having.
It's like, yeah, okay. Interest rates are high, but. It's like he, he, you know, was there signing off on these, these deals with, uh, PSEG in New Jersey and, uh, Eversource in, in Connecticut, uh, and Rhode Island that were just frankly terrible deals. I mean, it just, they, they ended up, Orsted ended up having to pay.
for whatever the utility companies had invested time and money and effort and et cetera, uh, into, you know, the development work on these deals, um, in case they decided to pull out plus, you know, uh, a little extra. And it's like, that's, that's the way it is. You know, you might think that that's typical, but when you get into a deal like this for an offshore wind farm, uh, I mean, we're starting to talk in the hundreds of millions of dollars, and it led to this, this multi billion dollar impairment that they had, you know, last year.
So, you know, I think I said on the show six months ago that he was likely to be gone, and guess what? He is.
Allen Hall: My feeling about it is there's just a little bit of happenstance, but that's the problem at being in leadership You don't get to choose the economic times in which you're running the company and you have to play what the cards are dealt right, I Wouldn't say any offshore wind developer in the United States.
This has great numbers at the minute So it isn't like Orsted has is in a different bucket at the minute it but I I I think the, my contention at the time was New Jersey really screwed Orsted. Not the, the government in New Jersey was just negotiating in bad faith. And they wanted to take all the federal tax credits, which Orsted agreed to, and then they needed them back.
And then it just went back and forth there. And it just felt like it was unnatural for a Scandinavian country. Like an organization in Scandinavia like Orsted is, which is, you know, the national, uh, energy source for Denmark to deal with such kind of shady characters. It's, it wouldn't happen if they were dealing with Norway or Finland or Germany, those things wouldn't have happened like that, but it just felt like, uh, they were a little bit out of the elements in terms of how they could get screwed.
And they, and they did. I
Joel Saxum: think if you look at the, like what the background with Mad Snippers was, is he was there for four years and they grew their portfolio big time, right? They went from 11, about 11 gigawatts. That's seven gigawatts of growth in four years of installed capacity is huge. So he has a skillset of scaling up, moving, making things go fast.
Uh, and if you read his like a little letter that he wrote on LinkedIn, thanks for all the time with the colleagues, the standard stuff you read, right? Um, but he did in that letter, he said, you know, look at the, the, you know, leadership's looking for someone with a little bit of a different skill set. And if you look at Rasmus, Airbo's skill set, he was a, he was lead, leading the IPO.
He was a part of divesting in the oil and gas business. So he has, it looks like he has a bit more of a financial or commercial mind than say Mads was just like, blow and go, let's, let's develop as much as we can is what it looks like from the numbers. Right?
Allen Hall: Yeah. But Orsted financially is doing just fine.
It didn't look great, but Orsted is doing quite well. But the stock, the, the stock price is the, is the one, right? That's the one you can't really walk away from, but you don't have any control over the stock price. In a sense, he delivered EBITDA numbers that were true, and it wasn't like he was trying to deceive the market, but no one ever accused Mads of that.
He, he was really straightforward When bad stuff happened, he'd get out in front of it and tell you bad stuff's about to happen, which is great. However, the market just moved away from Orsted and from renewables from that sense, uh, does that sound something he can really control, right?
Phil Totaro: No, uh, from, from that perspective, but, and, and look again, to, to, you know, not beat up on him too much, like what Joel said, you know, he oversaw the expansion of the company.
Orsted acquires, uh, Lincoln Electric under his, um, you know, watchful eye. Uh, and, and they moved into a lot of new, new markets, including, you know, developing offshore in Taiwan, um, you know, growing their portfolio in Europe and pioneering a lot of what got, you know, built and, and, you know, is still being built here with, With revolution wind, uh, in, in the US, you know, I mean, he, he caused the company a certain amount of frustration and embarrassment.
And, you know, typically in Europe, like they, they don't just like, unless it's like egregious, like you won't see an executive get, you know, heave hoed, right. Immediately after, you know, something happens, they'll usually give it six months and then they'll, they'll just shift in a new direction, which is basically what they're saying.
So again, unsurprising that this happened, there were plenty of good things to talk about, but also some, some concerns that I'm sure the company had as to how things were being handled and bringing in somebody else. That's probably going to handle them in a, in a bit of a different way is what we're going to talk about.
Um, you know, something that, uh, frankly needs to happen sometimes at a company to, to, you know, stabilize, especially for a publicly traded company, like you need to, to provide investors with confidence and, and stabilize the situation.
Allen Hall: Is Oristed going to structurally change from what it is now?
Phil Totaro: That's a interesting question because they don't actually have a whole lot.
That they could, you know, like lump off and. Right. I think they can lean a little bit, but not much. Yeah. I mean, but it's also, you know, if you made it a point to acquire an onshore renewable portfolio, I mean, maybe they sell that off, but that could also just be like, What a lot of other companies do with an asset rotation, just like, Hey, let's get some cash by divesting some, some older assets, um, and reinvest the proceeds in new greenfield projects.
That could, and it is probably, if anything were to happen, that's the likeliest thing to happen, but it's not like you can take and split the company up. Or anything any more than it already was, they already got rid of the oil and gas stuff and they already got rid of the utility, um, retail business over in Denmark as well, a year or two or three ago.
So, you know, that this is it, like, you know, Orsted's, uh, uh, pretty much an offshore wind and a little bit of onshore renewable development company.
Joel Saxum: Well, you have other, other people investing in Orsted too. So, so you have, you know, Econor's, they, they're 10%. Now from, from the Norwegian side, getting into this thing to kind of drive their goals, of course, towards, um, you know, investing in renewable energies, but what does it look like there, right?
Is what's the, what does the fly on the wall say at Econor's office looking at this thing there? I mean, in my mind, probably happy about this change because there's a, it looks like there could be a way forward.
Allen Hall: Well, did they drive it, Joel? I think the question is how much influence did Equinor have in the boardroom to make this swap and to, to put more focus on the sort of day to day finances?
I think with
Joel Saxum: their, with their 10 percent investment, they actually didn't get a board seat. That doesn't mean they don't have influence over what happens at the board level, right? But from a, from a legal standpoint, I think they, they didn't have that. Yeah,...
