Unafraid of Trump's "attack" on the wind power industry, Equinor (EQNR.US) injects $1 billion to support Orsted.

Norwegian oil giant Equinor (EQNR.US) on Monday pledged to provide nearly $1 billion in new funding to support Denmark's struggling Orsted, the world's largest developer of offshore wind power. Demonstrating confidence in this offshore wind developer, Equinor expressed its intention to participate in Orsted's planned 600 billion Danish kroner (approximately $94 billion) rights issue and stated that it will retain its 10% ownership stake in the company. Last week, the Trump administration issued a stop-work order for Orsted's "Revolution Wind" wind power project near the coast of Rhode Island. The company stated that the project is 80% complete, with all infrastructure in place and 45 of the 65 wind turbines installed. The offshore wind power project is expected to provide electricity to 350,000 households in Rhode Island and Connecticut. Equinor stated that its strong support for the rights issue reflects its confidence in Orsted's core business and the competitiveness of offshore wind power in the future energy structure. This government-backed Norwegian energy group is Orsted's second largest shareholder, after the Danish government. As part of this initiative, Equinor stated that it will nominate a candidate to Orsted's board of directors. Orsted's stock rose 3.6% on the Danish stock market following this news, but the increase narrowed thereafter. The company's stock price has dropped nearly 90% from its peak in 2021, hitting a new low in August after the Trump administration ordered the company to halt construction of a nearly completed wind power field. Both companies are facing challenges in the offshore wind energy industry. The Trump administration continues to attack offshore wind power projects. Equinor stated that it is closely monitoring developments in the United States and intends to stay in touch with Orsted. RBC Capital Markets analysts stated that Equinor's support for Orsted could be seen as the first step in considering a merger of two offshore wind power projects. These analysts stated in a research report, "The main challenge of comprehensive involvement in this project is that the company will effectively increase its net investment exposure to two fully owned and US-based offshore wind power projects. These projects do not appear to be scalable in the short term, and their political support is uncertain." They added, "The positive development is that, in addition to retaining its stake, Equinor will now have a seat on the board of directors, enabling it to fully utilize the current complex situation." This is not the first time the US government has ordered the suspension of large offshore wind power projects. In April this year, BOEM stopped Equinor's "Empire Wind 1" project, which aimed to power 500,000 homes in New York. However, in May, BOEM lifted the stop-work order, allowing the project to resume construction. During his second term, Trump has put pressure on the wind energy and renewable energy industries while promoting fossil fuels. On August 20, Trump posted on Truth Social, stating that wind energy and CECEP Solar Energy are "the biggest scam of the century!" and attempted to link renewable energy to higher electricity costs. Since taking office, Trump has targeted the wind energy industry. The most recent blow came last Friday when the US Department of Transportation canceled $679 million in federal funding intended to support more than a dozen infrastructure projects for offshore wind power nationwide. Secretary of Transportation Sean Duffy stated in a statement, "The resources wasted on these frivolous wind power projects could have been used to revitalize America's maritime industry." As one of his initial administrative measures, Trump temporarily suspended all federal permits for wind energy projects, a measure that is still in effect. Trump's landmark tax and spending legislation, the "Big and Beautiful Bill" (OBBBA), has also accelerated the gradual phase-out of tax incentives for wind energy and CECEP Solar Energy. Earlier, the Trump administration initiated a "232" investigation into imported wind turbines, paving the way for tariffs. Analysts believe that this investigation is aimed at increasing the cost of wind power projects and further hindering the industry's development. Orsted's Revolution Wind project began construction in 2023, having obtained all federal and state permits during the Biden administration. The wind power field is expected to be fully operational by 2026. This stalled project is just the latest challenge for the Danish company, which has faced several setbacks this year. The latest cancellation marks a new low for the company's efforts to replicate its European business in the United States. Recent issues such as high supply chain bottlenecks forced the company to cancel two large projects, resulting in multiple asset write-downs and changes in senior management. The company's rating has been downgraded to the lowest level of investment grade.