Equinor (EQNR.US) injects $1 billion to support Orsted, undeterred by Trump's "crusade" against the wind power industry

According to Jinse Finance, Norwegian oil giant Equinor (EQNR.US) on Monday pledged to provide nearly $1 billion in new funding to Orsted, the world's largest offshore wind power developer, to support the troubled Danish company. In a clear show of confidence in the offshore wind developer, Equinor stated its intention to participate in Orsted's planned DKK 60 billion (approximately $9.4 billion) rights issue and said it would maintain its 10% stake in the company. Last week, the Trump administration issued a stop-work order for its nearly completed "Revolution Wind" project off the coast of Rhode Island.

The company stated that the project is 80% complete, all infrastructure is in place, and 45 out of 65 wind turbines have been 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 this rights issue reflects its confidence in Orsted's core business and the competitiveness of offshore wind in the future energy mix. The government-backed Norwegian energy group is Orsted's second-largest shareholder, second only to the Danish government. As part of this move, Equinor said it would nominate a candidate to Orsted's board of directors.

Orsted's stock rose 3.6% on the Danish stock market following the news, but gains later narrowed. The company's share price has fallen nearly 90% from its 2021 peak, hitting a new low in August after the Trump administration ordered the company to halt construction of a nearly completed wind farm.

Both companies are dealing with challenges in the offshore wind industry. Currently, the Trump administration continues to attack offshore wind power projects. Equinor said it is closely monitoring developments in the US and intends to maintain communication with Orsted.

RBC Capital Markets analysts said Equinor's support for Orsted could be seen as the first step in considering a possible merger of the two offshore wind farms. The analysts stated in a research report: "The challenge of fully participating in this project is that the company would significantly increase its net investment exposure to two wholly owned offshore wind projects located in the US. These projects seem unlikely to be rolled out on a large scale in the short term, and the stability of their political support is also uncertain."

They added: "The positive development is that, in addition to continuing to hold shares, Equinor will now also have a board seat, allowing it to fully leverage the current complex situation."

This is not the first time the US government has ordered a halt to a major offshore wind power project. In April this year, BOEM halted Norwegian energy company Equinor's "Empire Wind 1" project, which was intended to supply power to 500,000 households in New York. However, in May, BOEM lifted the stop-work order, allowing construction to resume.

During Trump's second term, he has both pressured the wind and renewable energy industries and strongly promoted fossil fuels. On August 20, Trump posted on Truth Social that wind and solar energy are "the biggest scam of the century!" He also tried to link renewable energy to higher electricity bills.

Since taking office, Trump has consistently targeted the wind energy industry. The most recent blow occurred last Friday, when the US Department of Transportation canceled $679 million in federal funding—funds intended to support more than a dozen offshore wind infrastructure projects nationwide.

US Secretary of Transportation Sean Duffy stated in a statement: "The resources wasted on these wind power projects could have been used to revitalize America's maritime industry."

As one of his first executive actions, Trump temporarily suspended all federal wind energy project permit approvals, a measure that remains in effect. Trump's signature tax and spending bill—the "Outstandingly Big and Beautiful Bill" (OBBBA)—also accelerated the phase-out of tax incentives for wind and solar energy.

Earlier, the Trump administration announced it had launched a "Section 232" investigation into imported wind turbines, paving the way for tariffs. Analysts believe the investigation aims to increase the cost of wind projects and further hinder 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 farm is expected to be fully operational by 2026. The suspended project is just the latest challenge faced by the Danish company, which has already suffered several setbacks this year.

The latest cancellation marks a new low in the company's efforts to replicate its European business in the US. In recent years, issues such as high supply chain bottlenecks have forced the company to cancel two large projects, make multiple asset write-downs, and replace senior management. The company's rating has been downgraded to the lowest investment grade.