Other reports
Full ESG data overview
Our full ESG data overview (including EU tax-
onomy) and our accounting policies are avail-
able in our annual ESG performance report.
Our work for increased gender diversity at
leadership level is reported in accordance
with section 99 b of the Danish Financial
Statements Act in our ESG performance report
2022 (orsted.com/ESGperformance2022).
By publishing our sustainability report
(orsted.com/sustainability2022), we comply
with section 99 a of the Danish Financial
Statements Act. In the same report, reporting
on diversity in accordance with section 107 d
of the Danish Financial Statements Act can
be seen.
For information concerning section 99 d,
see page 59 in the annual report.
Annual reporting 2022
Get an overview of our financial, sustainability,
and ESG performance by downloading our
reports and investor presentations. See our
reports here:
Sustainability report 2022
In our sustainability report, you can read
more about how Ørsted as a business
contributes to addressing some of the
challenges faced by society.
Green bond impact report 2022
In our green bond impact report, you will
get an insight into our green bond portfolio.
Outstanding green bonds and green hybrid
bonds currently account for more than 80 %
of Ørsted’s total portfolio of bonds and
hybrid capital.
ESG performance report 2022
In our ESG performance report, you can
read more about Ørsted’s environmental,
social, and governance indicators.
Statutory corporate
governance report 2022
In our statutory corporate governance
report, you can read more about how
we have incorporated and follow the
recommendations prepared by the Danish
Committee on Corporate Governance.
Remuneration report 2022
In our remuneration report, you will get a
transparent and comprehensive overview
of the remuneration of our Executive Board
and our Board of Directors.
Management’s review
Ørsted annual report 20222
Overview
Performance highlights . . . . . . . . . . . . . . . . . . . . . . . . . 5
Letter to our stakeholders . . . . . . . . . . . . . . . . . . . . . . . 7
Our global footprint . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Financial outlook
Financial outlook 2023 . . . . . . . . . . . . . . . . . . . . . . . . 13
Financial estimates and policies . . . . . . . . . . . . . . . . . . 15
Strategy and business
Becoming the world’s leading green energy major . . . . . . 17
Strategic targets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Our journey towards a thriving and sustainable future . . . 21
The markets where we operate . . . . . . . . . . . . . . . . . . . 27
Business model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Executing our strategy . . . . . . . . . . . . . . . . . . . . . . . . . 31
Risks and risk management . . . . . . . . . . . . . . . . . . . . . 38
Results
Follow-up on 2022 guidance . . . . . . . . . . . . . . . . . . . . . 43
Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Five-year summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Fourth quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Quarterly summary, 2021-2022 . . . . . . . . . . . . . . . . . . . 54
Governance
Message from the Chair . . . . . . . . . . . . . . . . . . . . . . . . 56
Corporate governance . . . . . . . . . . . . . . . . . . . . . . . . . 57
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Group Executive Team . . . . . . . . . . . . . . . . . . . . . . . . . 65
Shareholder information . . . . . . . . . . . . . . . . . . . . . . . 67
Consolidated financial statements
Consolidated statement of income . . . . . . . . . . . . . . . . 71
Consolidated statement of comprehensive income . . . . . 72
Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . 73
Consolidated statement of shareholders’ equity . . . . . . . 74
Consolidated statement of cash flows . . . . . . . . . . . . . . 75
Notes
Consolidated ESG statements
(additional information)
Basis of reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
ESG performance indicators . . . . . . . . . . . . . . . . . . . . 157
Accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Parent company financial statements
Income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163
Statement of changes in equity . . . . . . . . . . . . . . . . . . 164
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Management’s statement, auditor’s reports,
and glossary
Statement by the Executive Board
and the Board of Directors . . . . . . . . . . . . . . . . . . . . . 173
Independent Auditor’s Reports . . . . . . . . . . . . . . . . . . 174
Independent limited assurance report on the
consolidated ESG statements . . . . . . . . . . . . . . . . . . . 179
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181
Management’s review
Contents
Financial and ESG statements
Management’s review
Ørsted annual report 20223
Bob is one of the 80 locally recruited O&M
professionals, who will soon be based at our
newly opened O&M hub at the Port of Taichung
in Taiwan.
The facility was built with locally manufactured,
energy-saving, and sustainable materials.
It features solar panels, a rainwater recycling
system, and charging stations for electric
vehicles. The hub will serve the three Greater
Changhua offshore wind farms.
Overview
5 Performance highlights
7 Letter to our stakeholders
11 Our global footprint
Ørsted annual report 20224
Management’s review
Performance highlights
Profits and returns Cash flow and balance sheet
2624.3
6512.3
Gross Investments
DKKbn
Our gross investments reached DKK 37.4
billion and was driven by our construction
of both wind and solar assets.
15.0
Profit for the year
DKKbn
Profit for the year was DKK 15.0 billion,
DKK 4.1 billion higher than in 2021.
The increase was mainly due to the
higher EBITDA.
With EBITDA excluding new partnerships of DKK 21.1 billion,
we ended above our original expectations and within our
latest guidance of DKK 21-23 billion. Read more on page 43
where we follow up on our 2022 guidance in detail.
Interest-bearing net debt
DKKbn
Our net debt increased to DKK 30.6 billion. The
increase was mainly due to dividend payments
of DKK 5.7 billion and higher lease obligations
of DKK 1.6 billion, whereas we had net neutral
free cash flows.
15 %
8 %
17 %
Return on capital employed (ROCE)
%
ROCE was 17 % for the year, which was above
our target of an average ROCE of approx. 11-12 %
for the Group in the period 2020-2027. In 2022,
ROCE was positively impacted by the 50 % farm-
downs of Hornsea 2 and Borkum Riffgrund 3.
Credit metric (FFO/adjusted net debt)
%
The credit metric funds from operations (FFO)
relative to adjusted net debt amounted to 43 %
in 2022, above our target of around 25 %.
37. 4
Operating profit (EBITDA)
DKKbn
EBITDA was record-high at DKK 32.1 billion.
EBITDA excluding new partnerships amounted
to DKK 21.1 billion, which compares to our
original guidance of DKK 19-21 billion and
our latest guidance of DKK 21-23 billion.
32.1
16.6
Follow up on outlook
announced for 2022
21.1
EBITDA, DKKbn
Guidance (2 Feb.) 19-21,
(11 Aug.) 20-22, (3 Nov.) 21-23
Realised
37.4
Investments, DKKbn
Guidance (3 Feb.) 38-42,
(11 Aug.) 43-47, (3. Nov.) 38-42
Realised
10.9
15.5
30.6 43
37.4
27.0
39.3
32.1
24.3
Excl. new partnerships New partnerships RBC divestment
2020 2021 2022
2020 2021 2022
2022 2022
2021 2021
2020 2020
2022
2021
2020
2022
2021
2020
Management’s review
Ørsted annual report 20225
Overview | Performance highlights
Employee satisfaction
Index 0-100
Our 2022 employee
satisfaction survey,
People Matter, showed
a high satisfaction and
motivation score of 76.
Nationality and gender diversity of the Board
of Directors and the Group Executive Team.¹
We continue to have strong focus on increasing
diversity at all leadership levels.
Safety
Total recordable injury rate (TRIR)
We continue to have a strong focus on the
safety and well-being of our employees.
Environment Social
Governance
15.1 58 18.2
13.1 58 25.3
Avoided emissions
Million tonnes, CO
2
e
Avoided emissions increased by 21 % due
to increased wind- and solar-based generation,
partly offset by a decrease in biomass-based
heat and power generation.
Greenhouse gas emissions intensity
(scope 1 and 2)
CO
2
e/kWh
The greenhouse gas intensity from our heat
and power generation and other operating
activities (scope 1 and 2) was 60 g CO
2
e/kWh.
The increase was driven by the increased use
of coal, partly offset by higher wind and solar
generation.
Greenhouse gas emissions, scope 3
Million tonnes, CO
2
e
Our scope 3 greenhouse gas emissions were
reduced by 40 %, mainly due to a 48 % decrease
in gas sales and a 10 % reduction in emissions
from commissioning renewable assets.
→
Installed renewable capacity increased
by 17 % to 15.1 GW in 2021 due to the
commissioning of the offshore wind farm
Hornsea 2, the onshore wind farms Haystack,
Helena Wind, and Ford Ridge as well as the
acquisition of Ostwind in Europe.
The green share of our heat and power
generation amounted to 91 %. The increase
compared to last year was driven by more
wind and solar assets in operation and higher
wind speeds, partly offset by higher coal-
based heat and power generation.
78
77
76
3.1
3.0 in 2021 / 3.6 in 2020
11.3
90
13.0
90
Installed renewable capacity
GW
Green share of generation
%
9 women
14 men
13 Danish
10 non-Danish
NationalityGender
15.1
91
18.2 60 11.0
1 The illustration includes both the eight members elected by the general meeting and the four members elected by the employees.
2020 20202021 20212022 2022
2022 2022 2022
2021 2021 2021
2020 2020 2020
2020 2021 2022
Management’s review
Ørsted annual report 20226
Overview | Performance highlights
Accelerated renewable energy
build-out is more needed than ever
Thomas Thune Andersen and Mads Nipper in Grimsby, the UK.
Letter to our stakeholders
Our ambition to reach approx. 50 GW of installed renewable
capacity by 2030 is more important than ever. The world is
facing a climate crisis, and it is indisputable that a transition
to a sustainable energy system is needed. In the past decade,
global investment in energy supply has slowed down by
2.4 % per year across all technologies, indicating a risk of an
emerging energy shortage. Especially in Europe, this risk has
been worsened by the war in Ukraine. This development has
made it evident that renewable energy is the best solution
to secure an independent, locally rooted energy supply, and
that investments must be accelerated. We are ready to be
part of this much-needed accelerated renewable energy
build-out.
Our longstanding industry experience in constructing large-
scale offshore wind farms and our strong supplier relations
give us a competitive edge in the industry, which enables us
to maximise joint strengths across our portfolio. We have
a well-functioning operating model, which allows us to
harvest synergies across markets, regions, and technologies.
We want to play a key role in the future energy systems with
a focus on three areas: offshore wind, onshore renewables,
and P2X (green fuels and e-fuels), and we aim to be a key
player in developing multi-technology solutions. Based on
our capabilities and experiences and our unique renewable
platform, we are ideally positioned to integrate renewable
technologies to help shape the future energy market and
to cater for the growing customer demand.
However, for the acceleration to be successful, it is crucial that
we build green energy right. Our actions should contribute
to fully decarbonising the world’s energy systems, to revive
and rewild our oceans and lands, to respect human rights in
everything we do, and to promote just societies and build
thriving local communities, based on stable high-quality jobs
and local supply chains.
Significant strategic and operational progress
The year 2022 underlined our continued leadership in off-
shore wind. Despite a challenging year for the industry with
continued supply chain bottlenecks and increasing costs of
raw materials and components, we are in a robust position for
weathering the current volatile market conditions. In 2022,
we achieved significant strategic results across our business,
and it keeps us ahead of our annual build-out targets towards
2030. We were awarded 2.9 GW of offshore wind capacity and
added 1.6 GW of onshore renewables through organic growth
and acquisitions. Additionally, we advanced seven projects
(1.4 GW) to FID and four projects (2.0 GW) to COD.
This increased our firm capacity to 30.7 GW by the end of
2022 and keeps us well on track to deliver on our 2030 ambi-
tion of ~50 GW. Furthermore, we achieved strong operational
performance with our assets remaining fully operational and
having strong availability rates. Our CHP plants supported
the much-needed security of supply in Denmark. Our green
share of heat and power generation amounted to 91 %.
In the UK, we were awarded a contract for difference (CfD)
for building Hornsea 3, the world’s single biggest offshore
wind farm, and we commissioned Hornsea 2, the world’s
largest operating wind farm.
In the US, we continued the development of our portfolio of
offshore wind projects off the East Coast. We took FID on South
Fork, which is well on track to be commissioned as our first US
project late 2023. For Ocean Wind 1, BOEM released its draft
environmental impact statement (DEIS), and we continued to
Management’s review
Ørsted annual report 20227
Overview | Letter to our stakeholders
mature the project boundary conditions and secure key supply
chain contracts. In January 2023, we signed an agreement to
purchase PSEG’s 25 % equity stake in the project. However, due
to supply chain bottlenecks, cost inflation, and higher costs of
capital, the value of our US projects with non-inflation-adjusted
contracts are under pressure. For our Sunrise Wind project in
New York, this led to an impairment. We remain committed
to our portfolio, and we are confident we can create value.
The early construction work of two of our German offshore
wind farms, Borkum Riffgrund 3 and Gode Wind 3, are both
progressing according to plan. In Taiwan, despite challenges,
we continued the progress in all areas of the construction of
Greater Changhua 1 & 2a and expect to commission the wind
farm in H2 2023. We decided not to participate in the third
Taiwanese auction as it did not meet our financial threshold.
By partnering with the offshore project developer Simply
Blue Group and the minority JV partner Subsea 7 on the
100 MW floating project Salamander in Scotland, we are
taking tangible steps into floating offshore wind. Likewise,
we signed an agreement and entered into a partnership
with Repsol, a global multi-energy company, to explore
the joint development of floating offshore wind in the
Iberian Peninsula.
We also formed a new partnership with Copenhagen Infra-
structure Partners to develop up to 5.2 GW of offshore wind
in Denmark across four projects. The partnership aims to
accelerate the green transformation, create value in the off-
shore wind industry, and create a Danish business and export
stronghold within renewable hydrogen.
In our onshore business in the US, we took FID on three pro-
jects, the wind farm Sunflower in Kansas, the solar PV project
Mockingbird in Texas, and the combined solar PV and storage
project Eleven Mile in Arizona. The wind part of Helena Energy
Center in Texas and the wind farm Haystack in Nebraska
were successfully commissioned.
Additionally, we are constructing the solar farm Old 300,
which is 78 % commissioned, and the solar part of Helena
Energy Center. We expect full commercial operation before
the end of 2023 for both projects. Furthermore, we acquired
the onshore wind farm Ford Ridge in Illinois.
We have taken yet another step within onshore renewables
in Europe by completing the acquisition of Ostwind. This
acquisition expands our portfolio into Germany and France
with a development project pipeline of more than 1.5 GW.
In Spain, we marked our entry into the onshore market with
four partnerships to pursue early-stage solar and onshore
wind projects.
To support our growth ambitions, we effectively recycled
our capital by signing and completing two new farm-downs.
The farm-down of Hornsea 2 was one of the largest renew-
able energy M&A transactions ever with a valuation that
underpins the attractiveness of our offshore wind assets.
In our onshore business, we closed our first-ever agreement
to farm down 50 % of a portfolio of four onshore projects in
the US to Energy Capital Partners. Both transactions secured
a NPV retention of around 100 % and crystalised value up
front, while providing proceeds, which we can reinvest in
value-creating growth.
In our P2X business, we took FID on and acquired the remaining
55 % of FlagshipONE, a late-stage development project in
Northern Sweden. The facility will have an electrolyser capa-
city of 70 MW and is expected to produce 50,000 tonnes of
e-methanol per year based on renewable hydrogen and biogenic
carbon. This is Ørsted’s first commercial-scale final investment
decision within its P2X business and represents a significant
milestone in the realisation of our P2X ambitions. It is also the
largest e-methanol project under construction in Europe.
We also signed a landmark letter of intent with A.P. Moller -
Maersk to deliver 300,000 tonnes of e-methanol to power
Maersk’s newly ordered e-methanol-powered vessels.
This has enabled us to accelerate the development of a
675 MW facility on the Gulf Coast.
Finally, both our ‘Green Fuels for Denmark’ project and
our Haddock P2X project in the Netherlands received IPCEI
funding in 2022.
Financial results
EBITDA including new partnership agreements totalled
DKK 32.1 billion in 2022, our highest EBITDA to date, of which
the gain from the 50 % farm-downs of Hornsea 2 and Borkum
Riffgrund 3 amounted to DKK 11.0 billion in total.
EBITDA excluding new partnership agreements amounted to
DKK 21.1 billion, an increase of DKK 5.3 billion compared to
2021. We benefitted from our diverse portfolio and achieved
significantly higher earnings from our onshore wind and solar
PV business, our combined heat and power plants, and our
gas activities than expected at the beginning of the year,
while earnings in Offshore decreased. The unexpected de-
crease in Offshore was primarily due to adverse impacts from
hedges and delays at our Hornsea 2 and Greater Changhua
1 & 2a construction projects. During the year, we have had
to recognise a DKK 1.3 billion negative impact from hedges,
which does not fulfil the requirements for hedge account-
ing under IFRS 9. The effect is temporary and will improve
EBITDA in later periods.
The return on capital employed (ROCE) was 17 %, and profit
for the year amounted to DKK 15.0 billion.
We increased our firm capacity to 30.7 GW
by the end of 2022, which keeps us well on track
to deliver on our 2030 ambition of ~50 GW
renewable capacity.
30.7 GW
Management’s review
Ørsted annual report 20228
Overview | Letter to our stakeholders
The Board of Directors recommends paying a dividend of
DKK 13.5 per share, corresponding to DKK 5.7 billion and
an increase of 8.0 %.
We expect EBITDA excluding new partnership agreements
to be DKK 20-23 billion in 2023, driven by a significant in-
crease in earnings from our operational renewable energy
assets partly offset by lower earnings from our CHP plants
and gas business compared to 2022. We remain confident
in our long-term financial estimates and growth ambitions.
Continued sustainability leadership
In 2022, we launched additional commitments, initiatives,
and pilots, which are needed to deliver on our medium-
and long-term targets. In addition to initiatives related
to our net-zero emissions target, we have acted on our
commitment to deliver a net-positive biodiversity impact
from all our new energy assets from 2030 at the latest
and our aspiration to drive a just transition. Our 98 %
carbon reduction target for 2025 remains unchanged.
However, we will not see steep emission reductions from
energy generation in 2023-2024, since we have been
ordered by the Danish authorities to continue operations
of our coal-fired power stations until June 2024.
We are proud founding members of the First Movers
Coalition steel and concrete sectors. In 2022, together
with only four other leading companies, we agreed to
further accelerate the decarbonisation of our supply
chain, by procuring at least 10 % ‘near-zero’ concrete by
2030. With this, we aim to pool our purchasing power
and create early market demand for near-zero concrete.
Since 1970, 70 % of the world’s wildlife have been lost, and
projections show that biodiversity will continue to decline
if we maintain business as usual. We have started a range
of initiatives, and in 2022, we launched an international
partnership with WWF. The partnership will help us achieve
our ambition and develop innovative ocean projects across
our markets. In an ambitious new project, we have part-
nered with the Lincolnshire and Yorkshire wildlife trusts
to restore biodiversity around the Humber in Northern
England. Additionally, we will protect almost 1,000 acres
of native prairie as part of our Mockingbird solar PV project
in the US together with The Nature Conservancy.
Building renewable energy comes with the opportunity
to provide high-value jobs and drive a socially just trans-
formation of our industry. We want to do both.
We are expanding our thriving communities programme
to make sure we have a robust impact management
system in place, which is geared towards delivering local,
social, and economic value.
Operating profit (EBITDA) increased by 32 % and amounted
to DKK 32.1 billion, our highest EBITDA to date.
32.1
24.3
EBITDA 2021, DKKbn
EBITDA 2022, DKKbn
February
Offshore wind farm South Fork,
New York, FID (130 MW), COD
expected in 2023
March
Letter of Intent signed with
A.P. Moller - Maersk to deliver
300,000 tonnes of e-methanol
from a US asset currently under
development.
Onshore wind farm Haystack,
Nebraska, commissioned
(298 MW)
April
Acquisition of majority stake
(80 %) in 100 MW Salamander
floating offshore wind
development project on the
Scottish coast
Partnership entered with
Repsol to explore the joint
development of floating
offshore wind in Spain
Onshore wind farm Sunflower,
Kansas, FID (201 MW), COD
expected in H1 2023
May
Agreement signed to acquire
the onshore wind farm Ford
Ridge, Illinois (121 MW)
June
Onshore wind part of Helena
Energy Center, Texas (268 MW),
commissioned
July
CfD awarded to Hornsea 3
Offshore Wind Farm, the UK,
(2,852 MW)
August
Offshore wind farm Hornsea 2
commissioned (1,320 MW)
September
Closing of 50 % farm-down
of the offshore wind farm
Hornsea 2
Completed acquisition of
Ostwind, a French-German
onshore renewable energy
platform
October
Partnership entered with CIP
to develop ~5.2 GW of offshore
wind in Denmark
Agreement closed to farm
down 50 % of four onshore
projects in the US to Energy
Capital Partners
Eleven Mile solar PV and
storage project, Arizona,
FID (300 MW
AC
, 300 MW),
COD expected in 2024
December
Mockingbird solar PV project,
Texas, FID 471 MW
AC
,
COD expected in 2024
E-methanol project
FlagshipONE, Sweden,
FID, COD expected in 2025
Haddock P2X project,
the Netherlands, received
IPCEI funding
‘Green Fuels for Denmark’ P2X
project received IPCEI funding
Selected events
2022
Management’s review
Ørsted annual report 20229
Overview | Letter to our stakeholders
As a first in the US, together with North America’s Building
Trades Unions (NABTU), we announced an agreement to
construct offshore wind farms with an American workforce.
In Choczewo in Poland, we have set up a community fund
to support local sustainable development opportunities,
and as part of Sunrise Wind in New York, we will recruit
and train workers from marginalised communities for union
construction careers.
To support our journey, we will ensure that sustainability
is embedded in the core of how we do business. This entails
a corporate governance that enables the right decisions.
In 2022, we took this further. Following implementation
for the leadership team in 2022, we adjusted our short-term
incentive (STI) scheme for all participating employees,
effective from 2023. The new STI supports a stronger link
to our 2030 aspirations, including global sustainability
leadership, and ensures that sustainability is further inte-
grated in our operating model.
Our employees and our organisation are the
backbone of our success
In a challenging and highly volatile year, our skilled and
valued employees have navigated this complexity well and
managed to deliver strong strategic progress and record
results for Ørsted. Our success is only possible through them,
and we care deeply about all our colleagues and our joint
safety. In 2022, our employee satisfaction survey showed a
motivation and satisfaction score of 76 out of 100. Although
this is a high score well above our external benchmark for
comparable companies, we aim even higher, and we will
continue to improve the well-being of our employees.
Having a strong focus on safety is anchored in our organisa-
tion in terms of both protecting the physical conditions of our
employees and securing a psychologically safe workplace.
In 2022, our total recordable injury rate (TRIR) reached 3.1,
up from 3.0 in 2021, mainly due to recordable injuries for
contractors’ employees. We are not satisfied with this
development. Consequently, we have implemented several
initiatives to improve safety, and we remain focused on our
ambition of reaching a TRIR of 2.5 in 2025.
As we expand our global footprint, we experience increas-
ingly different local market requirements. Therefore, as of
November 2022, we implemented a new organisational
structure, which is rooted in local regions while leveraging
the synergies of a global organisation. With this new
structure, integrating our offshore and onshore renewables
organisations and making P2X a stand-alone business, we
are moving closer to our markets and our customers. Conse-
quently, there were changes to our Group Executive Team,
including new regional executives.
Committed to our ambition
In 2022, an energy crisis was added to the global climate
and biodiversity crises. Renewable energy has proven to be
significantly cheaper than any fossil fuel alternative, even
with higher prices, and it has furthermore proven to be the
best possible insurance policy to avoid future energy price
increases like those seen last year.
Therefore, action must be taken to increase the pace of
the necessary investments in renewable energy. In the
US, an important step has been initiated by introducing
the US Inflation Reduction Act. It provides USD 385 billion
in funding for renewable energy generation, renewable
hydrogen production, and climate risks over the next ten
years. In the EU, the European Commission is planning a
Net-Zero Industry Act, which will be aligned with the 2050
climate targets and provide significant opportunities for
the renewable energy sector.
We need to push regulatory and political barriers to focus
on fast and streamlined permitting processes, which today
continue to represent a major bottleneck within our industry.
We are pleased to note that discussions around permitting
are ongoing in our major markets.
In light of supply chain bottlenecks, inflation, and increasing
cost of capital, it is also essential that countries and states
are willing to pay realistic long-term prices for renewable
power. We will uphold the necessary financial discipline to
ensure our projects are profitable. Furthermore, we need to
push for increased focus on the societal value provided by
renewables to secure a sustainable build-out of the industry
and for future auction frameworks to include factors like
efficient system integration, biodiversity, and the restoration
of nature to the benefit of local communities.
We believe it can be done, and we, at Ørsted, are well-
positioned to continue to play a pivotal role in the accele-
rated build-out needed in the coming years.
Mads Nipper
Group President and CEO
Thomas Thune Andersen
Chair of the Board of Directors
Management’s review
Ørsted annual report 202210
Overview | Letter to our stakeholders
3Offshore 1.9
APAC
4
2
Offshore 9.1
Onshore 0.4
United Kingdom and Ireland
Offshore 6.8
CHP, power 2.5
Onshore
CHP, heat
Continental Europe
0.1
3.4
Firm capacity
In operation
Under construction (FID)
Awarded
Substantiated capacity
Substantiated pipeline
3.0 GW
Offshore
CHP plants
Sales of energy
P2X
United States
of America
10.7 GW
Offshore
Onshore
Solar, PV
Storage
P2X
Firm capacity
United Kingdom
9.2 GW
Offshore
Onshore
Storage
P2X
Sweden
0.1 GW
P2X
Sales of energy
Estonia
Offshore
Latvia
Offshore
Japan
Offshore
Korea
Offshore
Taiwan
1.9 GW
Offshore
Vietnam
Offshore
Poland
2.5 GW
Offshore
France
0.1 GW
Onshore
Solar, PV
The Netherlands
0.8 GW
Offshore
P2X
Germany
2.6 GW
Offshore
Onshore
P2X
Ireland
0.4 GW
Onshore
Solar, PV
Capacity
GW
2.3
7
P2X 0.1
Our global footprint
30.7 GW
Spain
Offshore
Onshore
Australia
Offshore
59.3 GW renewable pipeline, including 16 GW
of substantiated pipeline in Offshore and 12.6 GW
of substantiated pipeline in Onshore.
Offshore 5.0 3
8.3
Onshore 3.2
Solar, PV 2.1
United States of America
Storage 0.3
Solar, PV 0.1
Management’s review
Ørsted annual report 202211
Overview | Our global footprint
Financial outlook
13 Financial outlook 2023
15 Financial estimates and policies
Our onshore wind and solar PV footprint in
Europe just got bigger. In 2022, we acquired the
German-French developer, owner, and operator
Ostwind – and with it, 152 MW onshore wind and
solar PV in operation and under construction in
France and Germany, with a further 1.5 GW in
development.
This follows our acquisition of an onshore
wind platform in the UK and Ireland in 2021
and our recent entry into the Spanish onshore
wind market.
Ørsted annual report 202212
Management’s review
Outlook 2023
DKKbn
2022
realised
2023
guidance
EBITDA (without new partnerships) 21.1 20-23
Offshore (without new partnerships) 8.6 Significantly higher
Onshore 3.6 In line
Bioenergy & Other 8.6 Significantly lower
Gross investments 37.4 50-54
Our EBITDA guidance for the Group is the prevailing guidance, whereas the directional
earnings development per business unit (and components) serves as a means to support
this. Higher and lower indicate the direction of the business unit’s earnings relative to the
results for 2022.
Financial outlook
2023
Group EBITDA guidance
As in previous years, our EBITDA guidance does not
include earnings from new partnership agreements.
Operating profit (EBITDA) excluding new partnership
agreements is expected to be DKK 20-23 billion in 2023.
We have expanded our guidance range from previously
DKK 2 billion to DKK 3 billion due to the increasing energy
market volatility. As in 2022, we could see offsetting
effects between the business units compared to our
directional guidance.
Offshore - significantly higher
Earnings in Offshore (excluding new partnership agree-
ments) are expected to be approx. DKK 6.5 billion higher
than in 2022.
The net positive impact on EBITDA in 2023 is driven by:
– ramp-up of generation from Greater Changhua 1 & 2a,
which is expected to be commissioned in H2 2023
– negative impact from overhedging and ineffective
hedges in 2022 not expected to be repeated in 2023
– CfD and ROC farms getting a material inflation
adjustment in Q2-Q4 2023
– net higher generation from Hornsea 2 and lower
balancing costs but higher OPEX and lower expected
trading results
– minor earnings from existing partnerships in 2023
– an expected DKK 0.8 billion increase in costs related
to project development, P2X, and general costs.
Guidance on 2023 EBITDA without new partnerships
DKKbn
2022
excl. new
partnerships
Ramp-up
Greater
Changhua
1 & 2a
Hedge
effects
Sites,
other
Existing
partnerships
Other,
incl. DEVEX
CHP
plants
Onshore Gas
markets
2023
excl. new
partnerships
~1.5 ~6
~1 ~3
~1
~1 ~3
21.1
20-23
Bio & OtherOnshoreOffshore
Management’s review
Ørsted annual report 202213
Financial outlook | Financial outlook 2023
Onshore - in line
Earnings from onshore wind and solar farms in operation
are expected to be in line with earnings in 2022 due to:
– ramp-up of generation from the wind part of
Helena Energy Center, Old 300, Sunflower,
Haystack, and Ford Ridge
– full-year earnings from Ostwind, which was
acquired in Q3 2022
– total power generation expecting to increase
with approx. 15 %
– lower expected power prices in the US and price
caps in Ireland
– an expected DKK 0.2 billion increase in project
development and general costs.
Bioenergy & Other - significantly lower
Earnings from both our CHP plants (including ancillary
services) and ‘Gas Markets & Infrastructure’ are expected
to be approx. DKK 6 billion lower than in 2022.
In 2022, our CHP plants benefitted from the very high power
prices and spreads, which are not expected to be repeated
to the same extent in 2023.
In 2022, earnings in ‘Gas Markets & Infrastructure’ saw a
positive effect from optimising our north-western European
gas activities, where we were able to lock in gains from the
offtake flexibility in some of our sourcing contracts and at gas
storages. In addition, we had a positive effect from release of
a provision related to our B2B activities in the UK. In 2023, we
expect earnings to be fairly limited, reflecting normal margins
on these activities, lower volumes, and a negative timing
impact related to our Danish gas storage activities.
Gross investments
Gross investments for 2023 are expected to amount to
DKK 50-54 billion, mainly driven by:
– Offshore (Greater Changhua 2b & 4, Greater Changhua 1
& 2a, Borkum Riffgrund 3 and Gode Wind 3, Ocean Wind 1,
and our US North-ast cluster projects)
– Onshore (Eleven Mile, Mockingbird, and projects from our
substantiated pipeline in both the US and Europe)
– timing effects between years (lower level in 2022,
postponed to 2023).
Uncertainties, prices, and hedges
Our offshore wind farms are largely subject to regulated
prices, implying a high degree of revenue certainty. This
means that we know the price per generated MWh for most
wind farms in Denmark and Germany, our first Dutch wind
farm, and the CfD wind farms in the UK. For our British ROC
wind farms, we also know the subsidy per generated MWh
which we will receive in addition to the market price.
The part of our generation from offshore and onshore assets
which is exposed to market prices has, to a large extent, been
hedged for 2023. The same applies to our currency risks.
Generation from our CHP plants is partly hedged. On a Group
level, we hold a hedge level of around 70 % for 2023.
The most significant uncertainty to the operating profit in
2023 is the power generation, which depends on wind condi-
tions, ramp-up of new wind and solar assets, asset availability,
timing of possible farm-downs, and the attractiveness of
spreads on our CHP plants. In addition, high gas and power
price volatility could impact earnings for the year through
optimisation possibilities at our gas storage and sourcing con-
tracts as well as higher balancing and intermittency costs.
Forward-looking statements
The annual report contains forward-looking
statements, which include projections of our
short- and long-term financial performance
and targets as well as our financial policies.
These statements are by nature uncertain
and associated with risk. Many factors may
cause the actual development to differ
materially from our expectations.
These factors include, but are not limited to,
changes in temperature, wind conditions,
wake and blockage effects, precipitation
levels, the development in power, coal,
carbon, gas, oil, currency, inflation rates, and
interest rate markets, changes in legislation,
regulations, or standards, the renegotiation
of contracts, changes in the competitive
environment in our markets, and reliability
of supply.
Read more about the risks in the chapter on
‘Risks and risk management’ and in note 6.
Management’s review
Ørsted annual report 202214
Financial outlook | Financial outlook 2023
Financial estimates
and policies
Capital Markets Day 2023
On 8 June 2023, we will host a Capital Markets Day (CMD).
Together with the Group Executive Team, CEO Mads Nipper
will present a progress update on our long-term strategy.
Financial estimates
At our Capital Markets Day in June 2021, we presented four
key financial estimates to support our ambitious self-funded
build-out of approx. 50 GW of renewable capacity by 2030.
The financial estimates cover (see details in the table to
the right):
– spread to WACC on investments
– EBITDA CAGR for operating offshore, onshore,
and P2X assets
– ROCE
– share of EBITDA from regulated and contracted activities.
As a consequence of supply chain disruptions in the wake
of the COVID-19 pandemic, cost inflation, and prolonged
permitting processes, especially in the US, the gross invest-
ments from 2020 to 2027 to enable our 50 GW build-out are
currently trending higher than the approx. DKK 350 billion
we had planned for. However, if the inflation and energy price
levels remain at elevated levels, these factors will positively
impact our EBITDA CAGR and ROCE in the period and lead to
an increase in the relative share of EBITDA that is merchant.
Notwithstanding the higher trending CAPEX, we remain
committed to our CMD plan.
Financial policies and capital allocation
The Board of Directors will recommend to the annual general
meeting that a dividend of DKK 13.5 per share be paid for 2022,
equating an increase of 8.0 % and a total of DKK 5.7 billion.
Supported by the expected increase in cash flows from future
offshore and onshore assets, we still intend to increase annual
dividends paid by a high single-digit percentage compared to
the previous years’ dividends, covering the period up to 2025.
We will continue to invest our capital according to the
following principles, in order of priority:
– We will maintain our strong commitment to our credit
ratings (BBB+/Baa1).
– We will honour our dividend commitment to our
shareholders.
– We will invest in value-creating growth opportunities.
Authorisation to increase share capital
At the annual general meeting in 2022, we were authorised
to increase our share capital on one or more occasions until
April 2027. The authorisation allows for a capital increase
of up to 20 %, which can significantly expand our capacity
to invest in green growth beyond the ~50 GW of installed
renewable capacity towards 2030.
Financial estimates Target Year
Fully loaded unlevered lifecycle spread
to WACC at the time of bid/FID 150-300 bps Continuous
Average yearly increase in EBITDA from
offshore and onshore assets in operation ~12 % 2020-2027
Average return on capital employed
(ROCE) 11-12 % 2020-2027
Average share of EBITDA from long-term
regulated and contracted activities ~90 % 2020-2027
Read more about our key metrics, financial targets,
and policies in the presentation from our Capital Markets
Day at orsted.com/en/ capital-markets-day-2021
Financial policies
Rating Min. Baa1/BBB+/BBB+ (Moody’s/S&P/Fitch)
Capital structure ~25 % (FFO/adjusted net debt)
Dividend policy Ambition to increase the dividend paid by
a high single-digit rate compared to the
previous years’ dividends, covering the
period through 2025
Our current rating is in accordance with the policy.
Management’s review
Ørsted annual report 202215
Financial outlook | Financial estimates and policies
Strategy and business
17 Becoming the world’s leading green energy major
19 Strategic targets
21 Our journey towards a thriving and sustainable future
27 The markets where we operate
30 Business model
31 Executing our strategy
38 Risks and risk management
Planes taking off from Copenhagen Airport
could be fuelled by green jet fuel as soon
as 2025. That is thanks to the decision to
accelerate our flagship P2X partnership,
‘Green Fuels for Denmark’, of which Ørsted
is a founding member.
The project aims to establish large-scale
production of sustainable fuels for the transport
sector, using electrolysis powered by Ørsted’s
offshore wind assets along with carbon
captured from our biomass operations.
Ørsted annual report 202216
Management’s review
Becoming the world’s leading
green energy major
We are working towards our vision of a world that runs
entirely on green energy, and we see ourselves as playing
a leading role in achieving this vision. Therefore, we have set
a bold strategic aspiration, supported by our strong multi-
technology growth platform.
Strategic aspiration
In 2021, we set our strategic aspiration to become the world’s
leading green energy major by 2030. Our strategic aspiration
is not just about gigawatt capacity. Rather, it means reaching
leading positions across five pillars.
The first pillar is our aim to be one of the world’s largest green
electricity producers. This will require us to significantly
increase our installed renewable energy capacity. Our
ambition is to reach approx. 50 GW by 2030, which is more
than three times our current installed capacity of 15.1 GW
(across offshore wind, onshore wind, solar PV, P2X, energy
storage, and combined heat and power plants). As part of
this ambition, we want to maintain our global leadership in
offshore wind, and we want to be a significant player global-
ly within onshore renewables (which includes onshore wind,
solar PV, and energy storage). Furthermore, our ambition
encompasses a leading position in the global P2X market;
renewable hydrogen and green fuels are central to resolving
the most challenging elements of the energy transition, de-
carbonising hard-to-electrify sectors. Our renewable energy
development expertise, customer relationships, and
proven experience in managing complex projects will be
a significant advantage in this rapidly evolving market.
The second pillar relates to capital deployment. Our
ambition is to be one of the world’s largest and most value-
creating deployers of capital into the green transformation.
While offshore wind remains our largest investment area,
onshore renewables and P2X will gradually take up a
larger share.
The third pillar is our ambition to be the world’s leading
talent platform in renewable energy. We want to bring
together a diverse combination of perspectives and
competences to help us deliver on our vision. We believe
that talent is diverse by nature, and it is essential to foster
an inclusive culture to reap the benefits of a diverse
talent pool.
The fourth pillar covers our ambition to be a globally
recognised sustainability leader. Sustainability is at the
core of our business. Both because renewable energy
is crucial for tackling climate change and protecting
our environment, and because we insist on a renewable
build-out that is done right. We want to leverage the full
potential of renewable energy to create lasting positive
impact that contributes to reviving nature, promoting
just societies, and creating resilient jobs. We want to do
so because it is the right thing to do, but also because it
Significant player
in onshore
renewables
A global leader
in P2X
Global no. 1
in offshore
wind
2030 aspiration
Become the world’s leading
green energy major
Vision
Let’s create a world that runs
entirely on green energy
Growth
platform
One of the world’s largest green electricity producers
One of the world’s largest and most value-creating
deployers of capital into the green transformation
The world’s leading talent platform in renewable energy
A globally recognised sustainability leader
A core contributor and catalyst for change towards
a world running entirely on green energy
Offshore
wind
Onshore
wind
Solar
PV
Energy
storage
Renewable
P2X
Ørsted annual report 202217
Management’s review Strategy and business | Becoming the world’s leading green energy major
is the right direction for Ørsted to take to create lasting
value for our stakeholders and business. To build a truly
resilient business and supply chain, we need to integrate
sustainable and reliable solutions into everything we do.
And we need to do it now.
Finally, we have set an ambition to be a core contributor
and catalyst for change towards reaching our vision of a
world that runs entirely on green energy.
We want to set new and ambitious standards for what it
means to be a green energy major, and we want to lead
by example in the energy industry and beyond. As part
of this, we will continue to engage with stakeholders and
decision-makers to build support for and promote action
towards our vision.
Ørsted is already working across the industry and playing
a vital role in finding common ground for decarbonisation,
for example by linking suppliers and offtakers.
To help us track our progress, our strategic aspiration is
supported by eight strategic targets, as described under
‘Strategic targets’ on the next page. For each target,
it is also illustrated how the target supports our pillars.
Our work towards our strategic aspiration spans our
entire business, and we continue to drive forward our
efforts alongside the progress on our strategic targets.
An expanded and diversified
growth platform
To reach our 2030 strategic aspiration, we are expanding
and globalising our growth platform. Over the last year,
we have identified new opportunities, and we now have
a strong growth platform for onshore and P2X in both
Europe and the Americas. We remain a global leader in
offshore wind across Europe, the Americas, and APAC.
We are continuously identifying new opportunities
with both short- and long-term potential across our
growth platform.
In offshore wind, we have expanded our market presence
since 2021. We commissioned the world’s largest offshore
wind farm, Hornsea 2 in the UK, and we are acting to
expand our market footprint in growth markets, such as
the Nordics, the Baltics, Spain, Korea, Japan, Vietnam, and
Australia. As part of our expansion, we want to play a sig-
nificant role in enabling the commercialisation of floating
offshore wind, which we see as an important technology
for the build-out of renewables in deep water geogra-
phies. In order to reach our 2030 target of 30 GW installed
offshore capacity, our annual build-out target is 2 GW per
year towards 2025 and 3 GW per year towards 2030.
In onshore renewables, we have taken significant steps
over the last year. In the US, we took FID on three new
projects. With our acquisition of Ostwind (with an attrac-
tive pipeline covering Germany and France) as well as
multiple new partnerships in Spain, we have built a strong
growth platform in Europe. We are continuing to identify
opportunities to further scale our onshore presence and
build our onshore renewables capacity. In order to reach
our 2030 target of 17.5 GW installed onshore capacity,
our annual onshore build-out target is 1.5 GW per year
towards 2030.
Our P2X business is the most recent addition to our
growth platform. We see hydrogen and e-fuels as a key
component of the green transition and a major growth
area for our business. We are continuously developing
and maturing our +3 GW global pipeline of renewable
hydrogen and e-fuels projects, and in 2022, we took FID
on FlagshipONE and expanded into North America.
Our growth platform
Gross installed capacity
GW
2022
2030 ambition
Onshore
Other
(incl. P2X)
Other
(incl. P2X)
Offshore
17.5
30
~50
> ×3
15.1
8.9
4.2Onshore
Offshore
2.5
2.0
Global leader
New growth
platform
Identify
opportunities
Strong growth
platform
Identify
opportunities
Europe Americas APAC
Offshore
wind
Onshore
renewables
Other
(incl. P2X)
Ørsted annual report 202218
Management’s review Strategy and business | Becoming the world’s leading green energy major
2. Green share of generation
%
We intend to do everything within our control to meet our target
of having 99 % green share of generation by 2025. However, our
intermediate target in 2023 of a 95 % green share cannot be met
following orders from the Danish authorities to extend operation
of three of our coal- and oil-fired power stations in order to secure
the electricity supply in Denmark.
3. EBITDA growth from operating
offshore and onshore assets
%
Our target is to increase EBITDA from our offshore and onshore
assets in operation by an annual average of 12 % between 2020
and 2027. Between 2020 and 2022, we reached an annual
average growth of -7 %. The decline in 2022 is temporary.
1. Installed green capacity
GW
By 2030, our ambition is to have a gross installed renewable
capacity of approx. 50 GW. By the end of 2022, we had reached
15.1 GW of global renewable capacity installed, 4.3 GW under
construction, and 11.2 GW awarded.
4. ROCE
%
Our target is an average annual return on capital employed (ROCE)
of 11-12 % from 2020 to 2027. In 2022, our ROCE of 16.8 % was
positively impacted by the 50 % farm-downs of Hornsea 2 and
Borkum Riffgrund 3.
Strategic
targets
Target
20212020 2022 2020–2027
8.3 %
14.8 %
16.8 %
11–12 %
15.0 bn
2021
14.6 bn
2022
35-40 bn
2027
CAGR
-7 %
CAGR
+12 %
2020
16.9 bn
20212020 2022 2030
11.3
13.0
15.1
~50
30
Offshore
wind
Other (incl. bio-
mass and P2X)
17.5
Onshore
renewables
91 %
2022
90 %
2021
90 %
2020
17 %
2006 2025
99 %
One of the world’s largest green
electricity producers
Value-creating deployer of capital
Leading talent platform
A globally recognised sustainability leader
A catalyst for change
2030 aspiration
Ørsted annual report 202219
Management’s review Strategy and business | Strategic targets
2040 net-zero full value chain decarbonisation target
Our science-based net-zero target, which was approved by the Science Based Targets initiative
(SBTi) in October 2021, consists of two overall GHG reduction targets (5 and 6) and a limit on the
use of certified carbon-removal projects for neutralising residual emissions.
5. Greenhouse gas emissions intensity
g CO
2
e/kWh
Scope 1-2
Scope 3
Our target is to reduce our scope 1-3 GHG emissions intensity (excl.
natural gas sales) by 99 % compared to 2018, implying a reduction
of the emissions intensity to 2.9 g CO
2
e/kWh by 2040.
For scope 1-2, we have an additional target to reduce emissions to
less than 10 g CO
2
e/kWh by 2025, which will be 98 % lower than in 2006,
and to less than 1 g CO
2
e/kWh by the end of 2040. We are committed to
using certified carbon-removal projects as a means of neutralising
the residual emissions.
8. Safety
TRIR
Our target is to reduce the total recordable
injury rate (TRIR) to 2.5 in 2025. In 2022,
our TRIR was 3.1. We continue to strive to
become a safer place to work.
7. Employee satisfaction
index 0-100
Ørsted
Ennova benchmark top 10 %
Ennova benchmark
Our target on employee satisfaction is to be in
the top 10 % in external benchmarks. In 2022,
the overall ‘motivation and satisfaction’ score
among our employees dropped slightly to 76
out of 100.
2020 2021 2022
78 78 73 77 79 74 76 80 74
3.1
3.0
3.6
2.5
20252021 20222020
29.2
25.3
11.0
18.2
14.6
<2.4
2032 2040Adjusted
base year
2018
20222020 2021
-90 % gas products
-50 % all scope 3
462
322
147
<10
<2.9
2025
Science-based
targets
Science-based
targets
20402006 2018 2022
-99 % scope 1-3
-98 % scope 1-2
6. Greenhouse gas emissions (scope 3)
million tonnes CO
2
e
Natural gas sales
Total scope 3
Other scope 3 emissions
We want to reach a 50 % reduction in scope 3 emissions from 2018 to 2032.
In addition, we will reduce our scope 3 emissions from wholesale buying and
selling of natural gas by 90 % by 2040 (also compared to 2018). In 2022,
we reduced scope 3 emissions beyond our 50 % reduction target for
2032. This was due to generally lower demand for gas following Russia’s
invasion of Ukraine and ceased deliveries from our gas sourcing contract
with Gazprom Export. We expect our scope 3 emissions to increase again
in 2024 once the Tyra gas field is reopened, and DUC resumes delivery to
us under our long-term gas sourcing contract.
Ørsted annual report 202220
Management’s review Strategy and business | Strategic targets
Our journey towards a thriving
and sustainable future
Green energy is the most impactful solution for fighting
global heating, and in our race against time, we need to build
it now. Yet, we must also build green energy right to ensure
we deliver a low-emission energy system that contributes to
a just and thriving planet. At Ørsted, we aspire to run a business
that gives more to nature and society than it takes, and we
will continue to partner with companies, customers, NGOs,
and others who share our aspiration to create lasting
positive impact.
Build green energy right, now
A massive acceleration of the renewable energy build-out is the
single biggest contribution that countries can make towards
reducing greenhouse gas emissions and ultimately tackle the
dramatic and damaging impacts of global heating.
Yet, it is increasingly apparent that a simplistic approach
focusing purely on quick wins and gigawatt numbers will
unreasonably stress nature, local communities, working
conditions, and supply chains. This is because the build-out
requires access to land and sea, which relies heavily on
coexistence with other users, nature, and local communities.
It requires materials for construction – some of which are
scarce or in high demand – and people with the right skills,
necessitating a larger workforce and reskilling and upskilling
to meet demand. In other words, focusing only on getting the
cheapest possible clean power increases the risk of negative
impacts on nature and society.
Ultimately, the success of the green transition heavily relies
on how we go about it. The world needs a speedy, scalable,
and progressive sustainable build-out. One that fully acknow-
ledges and addresses the impacts that climate change and
the build-out itself have on nature and societies to create a
truly sustainable world that runs entirely on green energy.
We need to build green energy right, now.
Giving up business as usual
The acceleration of renewable energy has already made
huge strides. Solar and wind power are already the most af-
fordable options for generating electricity in two thirds of the
world, and renewables are set to replace coal as the world’s
leading source of power generation by 2027. But in order to
stay below the 1.5°C threshold and avoid catastrophic and
irreversible damage, it is time to give up business as usual.
Time to give back more than we take
At Ørsted, we aspire to run a business that gives more to
nature and society than it takes. This requires us to integrate
solutions to the root causes of some of our biggest societal
challenges into our green energy projects, ensuring that the
green transformation creates a lasting positive impact on
our environment, biodiversity, and social structures.
Our end goal is to build practices that regenerate nature and
society. Our actions should contribute to fully decarbonising
the world’s energy systems – including the more difficult
Cod are top marine predators, making them vital for maintaining
the marine ecosystem’s delicate balance. We have embarked on
a number of projects to help protect and restore cod stocks in the
North Sea and, in turn, improve ocean biodiversity.
Ørsted annual report 202221
Management’s review Strategy and business | Our journey towards a thriving and sustainable future
sectors to decarbonise, like steel, concrete, and shipping
– while reviving and rewilding our oceans and lands. They
should identify, prevent, mitigate, and remedy any poten-
tial adverse human rights impacts in our work, promote
just societies, and build thriving local communities based
on high-quality jobs and local economic benefits.
We do not have all the answers, but we are committed
to finding them. And we know that to lift this agenda,
bold decisions and unprecedented collaborative action
are required at all levels of society – within and between
industries, businesses, and countries.
Our aspiration enables us to work on renewable energy
projects that contribute positively to wide-ranging and
common sustainability goals with the aim of realising
shared objectives for our customers, partners, investors,
and our business. We will therefore continue to partner
with key stakeholders, including local communities
and NGOs who share this agenda, to build and launch
commitments, pilots, and initiatives, scale learnings,
and successfully deliver long-lasting positive impact.
Our actions to deliver
In the past years, we have focused many of our efforts
on developing and defining the much-needed medium-
and long-term targets across our various sustainability
priorities. In 2022, we launched additional commitments,
initiatives, and pilots that are needed to move forward
and solve key challenges. To continue to deliver on our
strategic aspirations, we have also strengthened our
efforts to embed sustainability throughout how we do
business. In practice, this means that we work consistently
to integrate sustainability across all relevant parts of our
operating model to ensure we unleash the potential from
having everyone in Ørsted, our decisions, and our business
developments, pulling in the same direction towards our
aspiration. But also to ensure we have a strong organisation,
fit for the future and able to navigate in the constantly
evolving regulatory landscape.
On the following pages, we unfold this work across our
four interlinked strategic priority areas: climate, nature,
people, and governance. To the right, our full portfolio of
sustainability programmes is presented, spread across the
four priority areas.
Our sustainability programmes
Governance
Governance that enables the right decisions
14. Mobilisation of sustainable finance
15. Embedding sustainability in our operating model
16. Responsible business partners
17. Responsible tax practices
18. Responsible business conduct
“
We work consistently
to integrate sustainability
across all relevant parts
of our operating model
→
Every year, we identify the sustainability themes that are material
to our stakeholders and the success of our business.
We compare the material themes with our capability to address
impacts and expectations, we develop actions to close gaps, and
we update our portfolio of sustainability programmes. Learn more
about our approach, and how we work with each of our sustaina-
bility programmes in our sustainability report for 2022 (orsted.com/
sustainability2022).
Environment
Science-aligned climate action
1. Decarbonisation of supply chain and natural
gas wholesales
2. Decarbonisation of energy generation and operations
3. Reliable and secure energy infrastructure
Environment
Green energy that revives nature
4. Energy projects with net-positive biodiversity impact
5. Circular resource use
6. Healthy water systems
7. Sustainable use of biomass
Social
A green transformation that works for people
8. Thriving communities
9. Skills and talent for the green transformation
10 Human rights management and integration
11. Responsible sourcing of minerals and metals
12. Diverse and inclusive renewable energy sector
13. Safe and better ways of working
Ørsted annual report 202222
Management’s review Strategy and business | Our journey towards a thriving and sustainable future
With our 2040 net-zero target being validated as aligned
with climate science in 2021, we have spent 2022 focusing
on translating our commitment into tangible actions.
From a leading climate target to action
As the first energy company, Ørsted’s 2040 net-zero target,
covering our full value chain, was validated as aligned with
science by the Science Based Targets initiative (SBTi) in 2021. An
important step to achieving this is our commitment to reduce
the emissions intensity in our own energy generation and opera-
tions (scope 1-2) by at least 98 % by 2025 compared to 2006.
With our long-term target in place, we have focused our
efforts in 2022 on launching the next set of initiatives needed
to decarbonise our supply chain. Many of our core materials,
such as steel, concrete, and fuels, face a steep road towards
full decarbonisation. We do not have all the answers, but to
get on track for 2040, we need to move now - to pilot and
lean into innovative solutions.
Plans to meet scienced-based 2025 target unchanged
We had a set-back in 2022, with our absolute scope 1-2
emissions increasing by 17 %, as we temporarily had to resume
coal use at our Studstrup Power Station. This was due to
global scarcity of wood pellets following a ban on imports
from Russia and a wood pellet fire at Studstrup. Moreover,
following orders from the Danish authorities to temporarily
extend operation of three of our coal- and oil-fired power sta-
tions in order to ensure the security of the electricity supply in
Denmark, we had to delay our 2023 zero-coal target to 2025.
We maintain that coal has no place in the future energy
system, and our 98 % target for 2025 remains unchanged.
However, we will not see steep emission reductions from
energy generation in 2023-2024, until we are allowed to
completely phase out coal.
By 2025, our primary remaining emissions will be from the fuels
used for offshore wind logistics and the natural gas used at our
power stations for back-up capacity. We have initiated several
initiatives to reduce offshore logistics emissions — an area
where green options are not yet widely available. This includes
our pioneering agreement with a supplier on investing in the
world’s first service operation vessel (SOV) that can operate
entirely on green fuels. This is a big step towards decarbonising
offshore logistics, and together with our systematic approach
to fuel saving initiatives, it helps to create critical demand
signals to the industry to accelerate the green transition.
In addition, we continue to explore ways to further reduce
emissions from the remaining gas used at our power stations.
Realising net-zero in 2040
Looking towards 2040, our approach to realise net-zero
emissions in our value chain is twofold. First, we will gradu-
ally phase out our natural gas sales. Second, we will work to
decarbonise our renewable energy supply chains, which will
be the most challenging part of meeting the target.
We took three important steps in 2022:
– We expanded the expectation to use 100 % renewable
electricity by 2025 to all our suppliers — an industry first.
– We made a new commitment on ‘near-zero’ concrete
through the First Movers Coalition to procure at least
10 % ‘near-zero’ concrete by 2030.
– Together with Climate Group, we hosted the inaugural
SteelZero summit, a crucial step in our promotion of poli-
cies to decarbonise the steel industry.
Environment
Science-aligned climate action
Together, these commitments are important ways for us to
operationalise our 2040 target in the short to medium term.
Based on them, we can learn and test different solutions to-
gether with partners, and we can push the market to develop
and mature green technologies already now.
We expect our scope 3 emissions to increase again in 2024
once the Tyra gas field is reopened, and deliveries under our
long-term gas sourcing contract with DUC are resumed. We
remain on track to meet our 2032 target.
To read more about our decarbonisation efforts, including
how we now use site-specific life cycle assessments to
report on scope 3 emissions, please see pages 14-17 in our
sustainability report.
Taking credible climate action
On our journey towards net-zero, we face the challenge
that for many of the low-carbon solutions we urgently need,
a fully sustainable option does not yet exist or is not com-
petitive at scale and cost. Navigating these less mature
areas of sustainability can be difficult for all companies;
however, not acting is an option we do not have.
We seek to be a catalyst for change and try to tackle the
challenge by developing clear guidelines and outlining
sustainability ambition levels for our own approach, which
we also share with suppliers and partners. In this way,
we continually work to strengthen our approach, and we
aim to communicate transparently about it.
Ørsted annual report 202223
Management’s review Strategy and business | Our journey towards a thriving and sustainable future
If built right, renewable energy holds the potential for
enhancing biodiversity and improving ecosystems. We want
to do just that, and we are dedicated to delivering projects
that contribute to reviving our nature. We have set the
ambition that all our green energy assets will deliver a net-
positive biodiversity impact from 2030 at the latest.
Leading a build-out with a net-positive impact
on biodiversity
We are facing a global biodiversity crisis with 70 % of the
world’s wildlife having been lost since 1970. Climate change
is one of the main reasons, and the two crises are deeply
interconnected. However, if done right, the green energy
transition can play a key part in tackling both. To do so,
we need to start addressing climate and biodiversity goals
together. That is why we set our net-positive biodiversity
ambition in 2021, stating that with every asset we build,
we want to leave the surrounding ecosystems and wildlife
in a better condition than it was before.
Moving towards net-positive
Since setting our target, we have worked hard to progress.
In 2022, we took several exciting steps to move us from
ambition to action:
– We launched an innovative five-year global partnership
with WWF. In this partnership, we want to set a new
standard for biodiversity protection and restoration in
offshore wind development by showing what can be
done. Jointly, we will identify, develop, and advocate
initiatives and approaches that can enhance ocean bio-
diversity. Read more here.
Environment
Green energy that revives nature
– We have strengthened our dedicated biodiversity pro-
gramme. We have onboarded full-time regional bio-
diversity leads and taken the first steps to introducing
net-positive considerations early in our projects. We are
also integrating our Onshore business to the programme,
and as a first exciting initiative, we will protect almost
1,000 acres of native prairie as part of our Mockingbird Solar
Center in the US together with The Nature Conservancy.
– We continued to develop and pilot innovative biodiversity
projects. We do so to gain experience and learn from our
successes and failures with the aim of scaling successful
solutions. These include our 3D-printed reefs at the Danish
offshore wind farm Anholt (read more here), restoring
biodiversity in the UK’s Humber estuary (read more here),
and our ReCoral project in Taiwan (read more here).
Measuring our impact
A key challenge we face today is that no clear frameworks
exist for measuring and reporting on biodiversity impacts
across both terrestrial and marine ecosystems. This is
challenging not only when we wish to measure our own
impact, but also for ensuring global alignment on how
companies act and report.
To succeed, close collaboration is needed. We support
framework developers like the Science Based Targets
Network (SBTN) and work with them to develop an industry
standard for measuring biodiversity impacts at a corporate
level. In the meantime, we are also developing our own
framework so that we can already now begin to align on
how we measure and report on biodiversity.
Mitigating impacts through
a circular economy
Raw materials are being extracted, produced, and used
at a pace and scale that is damaging to our nature.
Transitioning to a circular economy — through which
we can reduce waste, circulate materials, and regenerate
nature — can play a key role in tackling this.
We are currently building a strategic approach to circu-
larity across our entire value chain. We do so with the
aim of reducing our use of raw materials, increasing asset
lifespan, and reusing and recycling materials. In 2022,
we adopted a commitment to reuse or recycle all solar
PV modules from our Region Americas’ solar farms.
We also built a circularity roadmap for our monopile
foundations to reduce their environmental footprint,
including the use of scrap steel. Read more in the
sustainability report, page 22.
Supporting the transition towards
a water-secure world
Pressure on global water systems and clean freshwater
supplies is increasing. Therefore, in 2022, we developed
a programme on water to ensure that our continued
build-out supports the transition to a water-secure world
with sufficient and clean supplies.
This includes our target to reduce our total freshwater
withdrawal intensity measured in l/kWh by 40 % from
2021 to 2025. We also work systematically to identify
opportunities to reduce or substitute our freshwater use.
For our P2X pipeline, we have established guiding water
principles that restrict the use of freshwater resources
in areas with elevated levels of water stress, instead
prioritising the use of alternative sources. Read more in
the sustainability report, page 24.
Ørsted annual report 202224
Management’s review Strategy and business | Our journey towards a thriving and sustainable future
Just transition is about people in our …
We are committed to drive a just transition to a green
economy. The challenge is to translate this commitment
into concrete action. How do we deliver a rapid build-out
of renewable energy that leaves no one behind?
Delivering a just transition
To succeed with our renewable energy ambitions, we must
drive a build-out that works for people. A build-out that is
just. This means going beyond ensuring that workers from
declining industries are brought into the green economy.
It demands that we respect fundamental human and labour
rights, promote a diverse and inclusive sector, take active
part in developing skills and talent, and support thriving
communities where we construct and operate assets.
to build on this experience and define the actions necessary
for us to keep contributing to a just transition.
We are strengthening our social sustainability programmes
In 2022, we defined six social sustainability programmes that
are essential for delivering a just transition, see table to the
right. Some were already familiar to us. Thus, we have built
solid practices regarding e.g. safety for years. For others,
however, we recognise that we have more work to do. Over the
next two years, we will strengthen each programme with long-
term targets and detailed roadmaps. Here, we outline how we
will work with two of the prioritised areas. To read more about
each programme, see our sustainability report pages 26-34.
Respecting human rights wherever we operate
In 2022, we published our ‘Global human rights policy’,
which outlines our commitment and approach to respect
human rights standards in everything we do. At the core of
the approach is the integration of human rights due diligence
in all key business processes. A first step was to perform a
corporate human rights impact assessment, which identified
Ørsted’s salient human rights impacts and gaps in our existing
human rights management system. The findings will inform
our continuous efforts to strengthen our human rights due
diligence approach.
Being a trusted partner to our local communities
We recognise that we have a responsibility to bring economic
opportunities to the communities where we operate, and
that thriving and supportive communities are critical for a
successful build-out. Therefore, in 2022, we began expanding
our local communities programme to make sure we have
a robust impact management system in place to shape
Social
A green transformation that
works for people
For more than ten years, we have built experience on what
a just build-out can bring. We have developed renewable
energy talents in Grimsby, expanded renewable energy
supply chains in Taiwan, and promoted women- and minority-
owned businesses in New Jersey. As we globalise our business,
and our projects impact more and more people, we are keen
and implement initiatives. In doing this, we are building on
experience across our markets. For example, in Choczewo in
Poland, we have set up a Community Fund to support local
sustainable development opportunities. As part of Sunrise
Wind in New York, we have committed to recruit and train
workers from marginalised communities. And, at the Port of
Taichung in Taiwan, we have inaugurated the largest local
operations and maintenance (O&M) facility in Asia in terms
of offshore service capacity, supporting the development of
local jobs and supply chains.
Going forward, we will define a community impact approach,
further strengthen our cross-market knowledge sharing,
start integrating social impact assessments into early project
planning, and track impact data to evaluate initiatives.
Social programmes Objective
Thriving communities Deliver socio-economic benefits to our local
communities in a fair and inclusive way
Skills and talent for the
green transformation
Develop talent inside and outside our company
to be the future leaders of the green transition
Human rights
management and
integration
Ensure that human rights are respected in
our operations, supply chains, and local
communities
Responsible sourcing
of minerals and metals
Ensure that our minerals and metals are
sourced in a socially responsible way
Diverse and inclusive
energy sector
Improve diversity, equity, and inclusion
in our own company and help our suppliers
do the same
Safe and better
ways of working
Maintain our strong safety performance and
foster a working environment that enables our
employees to live fulfilled lives
Narrow,
more control
Wide,
less control
wider
society
energy
industry
local
communities
supply
chain
company
Impact scale
Ørsted annual report 202225
Management’s review Strategy and business | Our journey towards a thriving and sustainable future
Governance
Governance that enables
the right decisions
We are embedding sustainability throughout our business
practice and processes, carrying our commitment to building
green energy in the right way all the way through our operating
model to ensure we have a future-fit organisation in an
evolving regulatory environment.
Delivering on ambitions and mitigating risks
To ensure we continue to deliver on our sustainability
priorities and to mitigate potential financial and reputational
risks, we need to continue to strengthen our efforts to system-
atically integrate sustainability into our operating model and
key decision-making. This will further unleash the potential
from having everyone in Ørsted pulling in the same direction
towards our ambitions.
Moreover, the reporting and regulatory space is rapidly devel-
oping. Sustainability is migrating from the sidelines and into
the heart of company reporting. We need to ensure a strong
organisation, fit for the future, with still more distinct and
complex sustainability reporting requirements and regulation.
Embedding sustainability into our operating model
To continuously embed sustainability throughout our operating
model, we have defined three strategic pillars: i) decision-
making & accountability, which focus on using sustainability
criteria as one of the key decision drivers in relevant parts of
our asset project model, ii) competences & governance, which
focus on ensuring that we have the right sustainability compe-
tences at the right places in our organisation, and iii) culture &
leadership, which focus on building behaviour, mindsets, and
awareness that are driven by sustainability improvements.
During recent years, we have taken steps to systematically
integrate sustainability across our operating model, for
example through our responsible business partner, conduct,
and tax practice programmes.
Following the changes in our short-term incentive (STI) scheme
for the leadership team in 2022, we have adjusted our STI
scheme for all participant employees, effective from 2023.
The new STI supports a stronger link to our 2030 sustainability
aspirations. We will assess leadership performance through
a combination of group level KPIs and by inspiring individual
goals. This approach to set individual sustainability-linked
goals will be expanded to all eligible Ørsted employees in
2023. Read more in the sustainability report, page 38.
We also built sustainability considerations further into
Offshore and P2X. From 2022, all our new Offshore opera-
tions and maintenance (O&M) facilities will have a LEED
certification, improving the buildings’ environmental and
social aspects. In our P2X market development activities,
we developed an ESG risk assessment framework that
supports systematic screening for decision-making on new
market opportunities. To guide us going forward, we have
defined a roadmap towards 2025 with activities spanning
across the three pillars.
A transparent, credible, and future-fit organisation
We have increased our engagement with investors through
calls and dialogues on our sustainability performance and
next steps. It has been an enriching experience to dive further
into expectations from a key stakeholder group.
We continued advocacy efforts in our industry and beyond,
including efforts to deliver credible climate action. At the UN
COP27, we called for giving up business as usual and giving way
to a build-out of renewables that create value through positive
We endorse and align with existing
and upcoming regulation
We are at a pivotal moment in the reporting sphere, which is
rapidly expanding. We fully welcome this development, which
will significantly improve data accuracy and transparency
and place ESG reporting on a par with financial. We endorse
and align our practices to relevant regulatory requirements
and standards and welcome the upcoming Corporate Sus-
tainability Reporting Directive (CSRD) from the EU. Across our
various reports, we show the risks and opportunities climate
change can have on our business (TCFD), our greenhouse gas
emissions (GHG Protocol), the extent to which our business
activities are defined as sustainable according to the EU
taxonomy, and how we are advancing in respect of the 17 UN
Sustainable Development Goals (SDGs).
We will continue our pro-active participation in various phas-
es of the regulatory process, engaging with peers, industry
groups, and regulators to help shape the legislation.
impacts on biodiversity and local communities. We also took
part in the formal launch of the Global Offshore Wind Alliance
(GOWA) where we will continue to play an active role in advising
governments and share best practice on how to speed up the
deployment of offshore wind power to more countries across the
world. We have endorsed the Corporate Knights’ Action Decla-
ration on Climate Policy Engagement to close the say-do gap on
countries’ emissions reductions, working with policy-makers and
industry associations to Paris-align climate policy activities.
Finally, in 2022, we continued to align with EU taxonomy
KPIs to show that we not only have activities that contribute
mitigating the effects of climate change, but also performing
them in a way that respects nature and people.
Ørsted annual report 202226
Management’s review Strategy and business | Our journey towards a thriving and sustainable future
The markets where we operate
Given recent geopolitical developments and the actions
and targets set by governments to limit global climate
change, we expect that the transformation of the global
energy system will accelerate in the years to come. This
will bring us significant growth opportunities across all
our business areas.
In the past year, Russia’s propensity to use energy for
geopolitical leverage has underscored how dependence
on fossil fuels cannot deliver the security of supply Europe
needs. As a result of Russia’s decision to limit gas flows to
Europe, many countries have decided to continue to use
or reinstate fossil energy sources that negatively affect
our climate. The solutions to the objectives of reducing
our energy dependence and mitigating climate change
are the same: replace fossil fuels with renewables, directly
and indirectly electrify energy use, and use energy as
efficiently as possible.
To decarbonise the global energy system and to increase
our energy independence, a large-scale renewable build-
out is needed. We believe this build-out will be based on
increasingly larger renewable energy projects, which will
require a significant scale-up of the transmission infrastruc-
ture, both onshore and offshore. To support the significant
build-out of offshore wind, we expect to see new types of
We operate across multiple adjacent markets that all have
substantial growth potential in the coming years and offer
attractive opportunities for us to expand our market presence.
The future energy system and
the shift in customer landscape
cross-national renewable hybrid transmission infrastruc-
tures and energy islands, which will be linked to several
markets. Such new types of transmission infrastructure will
enable significant cost savings and a more efficient use of
the energy produced by balancing intermittent electricity
generation with demand across two or more markets.
In addition to widespread green electrification, an important
driver of global decarbonisation will be P2X. Renewable
hydrogen will become the main decarbonisation vector
for heavy industry, long distance transportation, and other
hard-to-electrify sectors such as steel, refineries, and
chemicals. When renewable hydrogen is processed further
into e-fuels, it is expected to be the key instrument in
decarbonising heavy transport, such as deep-sea shipping
and aviation. The scale-up of P2X is expected to spark the
development of entirely new industries and value chains,
with companies from various offtake sectors engaging in
strategic partnerships with renewable energy developers.
This trend, too, will generate significant market oppor-
tunities for us, both in the P2X value chains and in the
associated required build-out of renewable energy.
By 2050, it is expected that nearly 90 % of global electricity
generation will come from renewables, with almost 70 %
from wind and solar PV alone (IEA).
New customer
landscape
Integrated smart
energy systems
Cross-national projects
and energy islands
Massive
renewable
build-out
P2X
Ørsted annual report 202227
Management’s review Strategy and business | The markets where we operate
This will require a smart and highly digitalised energy system
that can integrate and balance multiple renewable generation
sources as well as P2X and energy storage solutions. Digital
technologies will play a critical role in optimising energy pro-
duction to meet real-time needs across offtake segments.
The future customer landscape is also expected to change.
Companies are increasingly setting ambitious decarbonisa-
tion targets, seeking green solutions directly from energy
providers and becoming key drivers of green energy demand
alongside governments. An increased corporate demand is
contributing to the development of multi-product renewable
solutions, combining corporate purchasing of green electrons
from a variety of technologies with more sophisticated
storage solutions to enable different offtake profiles. In
addition, strategically advanced shipping companies such
as A.P. Moller - Maersk are leading the development of P2X
assets, acting ahead of anticipated EU decarbonisation obli-
gations, to execute direct long-term offtake agreements for
e-methanol, which is accelerating the P2X build-out.
Substantial market growth
The global renewable energy market is forecast to grow
exponentially towards 2030. This is partly due to the rising
political momentum behind the green energy transition,
which is resulting in ambitious new renewable energy build-
out plans around the world.
Some of our core markets are at the forefront of this
development, with multiple countries and regions an-
nouncing considerably accelerated ambitions. In addition,
renewables have become more cost-efficient compared
to fossil energy sources, and renewables can play a key
role in securing energy supply.
The global renewables capacity (offshore wind, onshore
wind, solar PV, and energy storage), excluding Mainland
China, is expected to increase by a combined average
growth rate (CAGR) of 15 % to around 4,000 GW in 2030.
Offshore wind is expected to show the fastest growth
(23 % CAGR), partly driven by significant build-out of
offshore wind in the US and APAC, though Europe will
remain the largest region by far.
Onshore renewables (wind, solar PV, and energy storage)
are more established and have the highest installed
capacity. Within onshore renewables, forecasts show a
CAGR of approx. 15 % towards 2030. Again, this is driven
particularly by the US and APAC, but Europe is expected
to maintain its position as the biggest onshore region.
Global targets for P2X now exceed 70 GW of installed
electrolyser capacity by 2030. Delivering on these will
require a very significant global ramp-up from developers,
offtakers, and the supply chain since installed electrolyser
capacity globally at present is less than 500 MW. The
development of infrastructure investment, in particular
pipelines, will be an essential element for facilitating this
expansion, particularly for transporting renewable hydrogen
within Europe. These are in planning stages and expected
to be constructed in the second half of the decade.
The growing role of multi-technology projects
With governments around the world raising their
ambitions and targets for renewable energy build-out,
there is an ever-growing need for integrating multiple
renewable energy technologies.
Installed capacity excl. Mainland China
GW
Europe US APAC Rest of the world
Renewable H
2
& green fuels
Installed electrolyser capacity
GW
~169
~27
23 % CAGR
~3,840
~1,120
15 % CAGR
Global renewable market forecasts
towards 2030
2030 20302021 2021
Offshore wind Onshore renewables
+90
+70
<1
+100
Installed
today
EU H2
strategy
1
Country
targets
H
2
Council
IRENA
+120Actual 2030 targets
& forecasts
←
1 Electrolyser capacity based on REPowerEU target of
10 million tonnes of domestic renewable hydrogen production
and 10 million tonnes of imports by 2030.
Source: BNEF New Energy Outlook 2022 for Onshore, Solar PV
and Batteries; BNEF Offshore Wind Market Outlook H2 2022
for Offshore; H2 Council; EU; IRENA; BNEF Global Hydrogen
Strategy Tracker 2022.
Ørsted annual report 202228
Management’s review Strategy and business | The markets where we operate
Large-scale renewable energy build-out will require multi-
ple sources and forms of green energy in order to balance
demand and supply and to mitigate the constraints of
energy infrastructure (such as transmission grids).
One way of integrating renewable energy technologies
is by developing energy islands, which we believe will
play a significant role in future energy systems. How-
ever, we also see a role for multi-technology energy
hubs in various other forms, with the potential to combine
(among others) wind energy, solar PV, P2X, carbon
capture, and energy storage.
Ørsted is positioned ideally to develop multi-technology
projects and cater for the growing customer demand.
Our capabilities and experience span offshore wind,
onshore wind, solar PV, energy storage, P2X, and combined
heat and power plants. On top of this, our existing assets
(both operational and under development) provide a
strong position from which to integrate additional renew-
able energy technologies. With our recent reorganisation,
structuring our business areas into a regionally organised
set-up, we are even better placed to integrate our work
across technologies. A multi-technology platform will
help us optimise energy systems, drive cost reductions,
and realise portfolio synergies.
Main industry challenges to solve in the coming years
Although we expect a significant build-out of renewable
energy in the coming years, the renewables industry is
presently facing several challenges. With rising inflation
and interest rates and with global supply chain challenges
(such as bottlenecks and scarcity of green materials),
increased pressure is placed on developers and manu-
facturers alike.
As offshore wind has been commoditised and has become
cost-competitive to fossil energy sources, governments
are now moving away from competition on lowest re-
quired subsidy and towards competition on either 1) pure
concession payment or 2) a combination of concession
payment and other value elements (sustainability, local
content, ability to deliver, etc.). Competition based only on
the highest concession payment incentivises developers
to narrowly focus on how to drive further aggressive cost
reductions of the offshore wind technology. This puts
additional pressure on the supply chain and leaves no
room to invest in project-specific solutions that otherwise
could have created a positive impact on biodiversity,
advanced social sustainability, and stimulated innovation
and system integration.
In 2022, some regulators proposed energy price caps or
windfall taxes to protect business and consumers against
increasing energy bills. In the EU, a price cap of EUR 180
per MWh was proposed, and the UK implemented a 45 %
windfall tax on power utility profits above GBP 75 per
MWh from January 2023.
In our ‘Need for speed’ white paper published in April 2022,
we outlined the urgency of speeding up regulatory pro-
cesses and tenders to meet the ambitious decarbonisation
and renewable build-out targets set by governments
around the world. We believe this is crucial to ensuring
sufficient renewable energy build-out to secure Europe’s
energy supply and help keep the global temperature
increase below 1.5 °C by 2100.
2030
Green New Deal
12 GW installed offshore wind capacity
OFW capacity build-out target
30 GW installed offshore wind capacity
Increasing political momentum
Governments are raising renewable energy ambitions
2030
Policies & legislation
New targets & initiatives in 2022 To be achieved by
Selected targets & initiatives in previous years
OFW capacity build-out target
20 GW installed offshore wind capacity 2035
2030
REPowerEU
45 % renewable energy
Increased renewables investments
2030
Inflation Reduction Act
Tax credits to incentivise investment in renewable
energy, P2X, and energy storage in the US
Powering Australia
82 % renewable energy
2030
British Energy Security Strategy
Up to 50 GW installed offshore wind capacity
2030
Esbjerg declaration (North Sea)
65 GW installed offshore wind capacity
20 GW renewable hydrogen production capacity
150 GW installed offshore wind capacity
2030
2030
2050
Marienborg declaration (Baltic Sea)
19.6 GW installed offshore wind capacity
Pursuing faster permitting processes
Ørsted annual report 202229
Management’s review Strategy and business | The markets where we operate
We create value by developing, constructing,
operating, and owning renewable assets and by
providing energy products to our customers.
Business model
Our core activities
Energy
products
Key resources
Financial capital — natural and human resources
innovation culture — relational capital
Value created
Society — customers
employees — shareholders
Develop
Secure our pipeline
through grid access
and permits
Build
Select suppliers
and contractors and adhere
to local content promises
Operate
Ensure high
availability and balance
power to the grid
Own
Manage and optimise
our portfolio of assets
and partnerships
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Ørsted annual report 202230
Management’s review Strategy and business | Business model
To reach our strategic aspiration of becoming the
world’s leading green energy major, we are continually
seeking to expand our growth, create value, and seize
new opportunities.
Across our business, we are making bold and strategic
choices to deliver results, both in the short and the long
term, and we have made considerable strategic progress
during 2022. In the following sections, we have outlined
some of our concrete achievements in the past year for
each of our business areas.
Executing
our strategy
→
Colleagues at Gode Wind, Germany.
Ørsted annual report 202231
Management’s review Strategy and business | Executing our strategy
1 Projects that have reached a level of maturity, such as secured
exclusivity through a lease, secured consent or environmental
impact assessment (EIA), or established partnerships, but not yet
taken final investment decision (FID).
2 Refers to early-stage projects which we are actively pursuing
through tenders.
3 Refers to the combination of capacity installed or under
construction which we have contracted or have been awarded.
Offshore wind
Our Offshore business reached significant milestones
during 2022. We were awarded a new project in Europe,
corresponding to a fifth of the total awarded offshore
capacity in 2022 (excluding seabed lease auctions), took
final investment decision (FID) on a development project
in the US, commissioned the world’s largest operational
offshore wind farm, and advanced the construction of our
other projects, including generation of first power from
Greater Changhua 1 & 2a. We also successfully farmed
down two of our projects in accordance with our farm-
down strategy.
We remain the world leader in offshore wind, having
developed around a third of the global capacity installed,
excluding Mainland China. We have played a key role in
maturing the industry and have built more offshore wind
farms worldwide than any other company. By the end
of 2022, we had 8.9 GW of capacity installed, 2.2 GW
of capacity under construction, and further 11.2 GW of
capacity awarded resulting in a firm capacity of 22.2 GW.
This aligns with our annual build-out targets to reach
30 GW installed capacity by 2030.
Offshore wind build-out plan
Gross renewable capacity
The additional 7.8 GW needed will be based on our substan-
tiated pipeline of around 16 GW and our opportunity pipeline
of around 57 GW. The oversized opportunity pipeline provides
us with the flexibility we need to select only projects that are
truly value-creating.
Strategic progress and expansion of our portfolio
During 2022, we commissioned our Hornsea 2 project in
the UK, now being the largest operational offshore wind farm
in the world, and we were awarded the Hornsea 3 project, with
an expected commissioning in 2027, if FID’ed. If Hornsea 3
is built, the Hornsea zone, including Hornsea 1, 2, and 3,
will have a total capacity of more than 5 GW, making it
the world’s largest offshore wind zone and providing power
to approx. five million homes in the UK.
In Denmark, we formed a new partnership with Copenhagen
Infrastructure Partners to develop up to 5.2 GW of offshore
wind across four projects. The partnership aims to accelerate
the green transformation, create value in the offshore wind
industry, and create a Danish business and export stronghold
within P2X.
In the Americas, we took FID on our 130 MW US project
South Fork Wind, which is part of the Northeast Programme
with a total contracted capacity of 1.8 GW. The project has
started offshore construction and is expected to be opera-
tional in 2023. In our Ocean Wind 1 project, we continued to
mature the project boundary conditions and secured key
supply chain contracts. The Bureau of Ocean and Energy
Management (BOEM) published the project draft environ-
mental impact statement in June 2022, a major milestone in
the federal permitting process. In January 2023, we signed
an agreement to purchase PSEG’s 25 % equity stake in the
project. The transaction is expected to close in H1 2023.
30 GW
2030 ambition
57 GW
Opportunity pipeline
2
16 GW
Substantiated pipeline
1
22.2 GW
Installed capacity + decided
+ awarded = firm capacity
3
8.9 GW
Installed capacity
11.1 GW
Installed capacity
+ decided capacity
Greater Changhua
2b & 4 920 MW
Baltica 3 1,045 MW
Ocean Wind 1 1,100 MW
Ocean Wind 2 1,148 MW
Skipjack 966 MW
Baltica 2 1,498 MW
Hornsea 3 2,852 MW
US North-East
cluster 1,628 MW
German portfolio 1,166 MW
South Fork 130 MW
Greater Changhua 1 & 2a 900 MW
Ørsted annual report 202232
Management’s review Strategy and business | Executing our strategy
In Asia Pacific, our first large-scale wind farm Greater
Changhua 1 & 2a (0.9 GW) generated first power in April.
The project is moving forward, and we expect COD to be in
H2 2023. Additionally, we expect FID on Greater Changhua
2b & 4 (0.9 GW) in Taiwan during 2023, with expected
commissioning in 2025.
Farm-downs to free up capital for future projects
Farm-down agreements continue to be strategically
important for Ørsted as an essential part of our efforts
to raise capital for accelerating new renewable energy
projects across our markets. During 2022, we completed
the divestments of two major assets. The agreement to
farm down 50 % of the 0.9 GW Borkum Riffgrund 3 project
in Germany to Glenmont Partners, one of Europe’s largest
fund managers exclusively investing in clean energy infra-
structure, was completed in February. The farm-down of
Hornsea 2 in the UK was completed in September, following
the commissioning of the 1.3 GW wind farm. The 50 % divest-
ment to a consortium comprising AXA IM Alts and Credit
Agricole Assurances was one of the largest renewable energy
M&A transactions ever. Both transactions secured a NPV
retention of around 100 %.
Further expansion into floating offshore wind
Floating offshore wind is a rapidly maturing technology with
an enormous potential for expanding offshore wind genera-
tion in existing markets and deploying offshore wind in new
geographies. We are partnering with the offshore project
developer Simply Blue Group and Subsea 7 on the 100 MW
floating project Salamander in Scotland. The project will be
developed in a joint venture, with Ørsted owning 80 %, and is
located off the east coast of Scotland.
We have also signed an agreement that sets up a partner-
ship with Repsol, a global multi-energy company, to explore
the joint development of floating offshore wind in Spain.
The agreement marks our next step into floating offshore wind.
Due to the country’s deep waters, this will allow Spain to
unlock the potential of its extensive coastline and transform
Spain into a European floating offshore wind hub. With Ørsted’s
three decades of experience in global offshore wind and
Repsol’s insights into the local market conditions, we are
strongly positioned to support Spain’s continued energy
transition.
Growing our usage of e-methanol
As part of our continued efforts to decarbonise, we signed
a ten-year lease in 2022 for the world’s first green fuel
vessel for offshore operations. Esvagt, a market leader in
service and support for offshore wind, will deliver the service
operation vessel (SOV), which will be powered by batteries
and dual-fuel engines, capable of sailing on e-methanol
produced from wind energy and biogenic carbon, which will
lead to an annual carbon emissions reduction of approx.
4,500 tonnes.
Installation of blades at Hornsea 2, the UK.
Ørsted annual report 202233
Management’s review Strategy and business | Executing our strategy
Onshore renewables
Our Onshore business made significant strategic progress
in 2022. We took a major step to expand our geographic
footprint through the acquisition of Ostwind in Europe and
strengthened our market positions in the Americas and in
Europe by commissioning assets under construction and
taking FIDs. In total, we added 825 MW of capacity to our
operating portfolio by commissioning three projects and
acquiring a German and French platform and an operational
wind farm in the US.
By the end of 2022, we had 4.2 GW of capacity installed
and 2.1 GW of capacity under construction. To reach our
ambition of 17.5 GW installed onshore capacity by 2030,
we will need to add an additional 11.2 GW to our firm
capacity of 6.3 GW. The additional capacity will be based
on our substantiated pipeline of around 12.6 GW and other
opportunities that may arise.
Strategic progress and expansion of our onshore portfolio
In the US, we commissioned Haystack in Nebraska (298 MW
wind), and the wind phase of Helena Energy Center in Texas
(268 MW wind). Both projects qualify for 100 % of the pro-
duction tax credit. Most of the production from Haystack is
contracted under long-term power purchase agreements
with Pepsi, Hormel, and Target, while the wind phase of
Helena Energy Center is contracted with Henkel.
The contracts for both projects have upside sharing
structures on the power price. These structures reduce
downside risks and allows for the capture of additional
revenue compared to traditional PPAs.
In addition to commissioning our own assets, we finalised
the acquisition of Ford Ridge, a 121 MW operational wind
farm in Illinois. This is our second project in the Midconti-
nental Independent System Operator (MISO) area, which
is an attractive market and one of the largest in the US.
The project is eligible for 100 % of production tax credits,
and its production is contracted under long-term PPAs
with Mars and its suppliers.
We took FID on three US projects. The first, Sunflower,
is a 201 MW wind project in Kansas, which we acquired as
an early-stage development project together with Lincoln
Land in 2021. The project was matured and significant-
ly advanced towards final investment decision in April
2022. The project is eligible for 100 % of the production
tax credit and is on track to reach commercial operation
before the end of 2023. The second, Mockingbird, is a
471 MW
AC
solar PV project in Texas, which we expect will
be the first solar project in our portfolio to qualify for
100 % of the production tax credit, as this scheme was
recently expanded by the US Inflation Reduction Act to
include solar PV projects. The third, Eleven Mile, is a com-
bined solar PV (300 MW
AC
) and storage (300 MW) project
in Arizona. Both Mockingbird and Eleven Mile are expect-
ed to reach commercial operation before the end of 2024.
In addition, we are constructing Old 300 and the solar
phase of Helena Energy Center. Both are US projects and
have been subject to delays due to the Uyghur Forced
Onshore wind build-out plan
Gross renewable capacity
1 Projects that have reached a level of maturity, such as secured
exclusivity through a lease, secured consent or environmental
impact assessment (EIA), or established partnerships, but not yet
taken final investment decision (FID).
2 Refers to the combination of capacity installed or under con-
struction which we have contracted or have been awarded.
4.2 GW
Installed capacity
6.2 GW
Installed capacity
+ decided capacity
6.3 GW
Installed capacity + decided
+ awarded = firm capacity
2
12.6 GW
Substantiated pipeline
1
17.5 GW
2030 ambition
Sparta Solar 250 MW
Lisheen 3 29 MW
Ballykeel 16 MW
Ostwind 75 MW
Ballinrea 65 MW
Old 300 430 MW
Eleven Mile 600 MW
Mockingbird 471 MW
Sunflower Wind 201 MW
Ørsted annual report 202234
Management’s review Strategy and business | Executing our strategy
Labor Prevention Act (UFLPA) and related legislation,
resulting in detainment of module shipments while trace-
ability documentation is collated. During 2022, however,
we installed around 78 % of project capacity at Old 300
with modules already cleared and delivered to the site.
The remaining modules are expected to be delivered
during 2023, and we expect full commercial operation
before the end of 2023. For the solar phase of Helena
Energy Center, we are also planning for commercial
operation before the end of 2023.
We expanded our footprint across Europe, entering multi-
ple new markets. In September, we closed the acquisition
of Ostwind and added 152 MW wind and solar capacity
in operation and under construction and 526 MW of
advanced development projects to our portfolio. The
acquisition marked our entry into the German and French
onshore markets. In 2022, we took FID on three German
and French wind farms with a total capacity of 68 MW.
Following Ørsted’s acquisition of Ostwind, Caisse des
Dépôts et Consignations, a co-investor in parts of Ostwind’s
operating portfolio in France, decided to exercise an
option to acquire Ostwind’s shares (totalling 87 MW)
of the projects that Ostwind and Caisse des Dépôts et
Consignations co-owned.
During 2022, we commissioned Kennoxhead 1, a 62 MW
wind farm in Scotland, the UK. In Spain, we entered into
four partnerships to pursue early-stage solar and onshore
wind projects.
Farm-downs to free up capital for future projects
In October, we closed a transaction with ECP to divest
50 % of our ownership interest in a US project portfolio
consisting of Plum Creek, Willow Creek, Lincoln Land, and
Muscle Shoals. The four projects all have tax equity partners,
who will remain partners following the divestment. The
farm-down is a first for the Onshore business and entailed
a NPV retention of around 100 %. We expect to continue
to leverage farm-downs to help raise capital to fund new
value-creating growth.
Growing our corporate customer portfolio
During 2022, we announced offtake contracts with seven
companies globally. The majority of the PPAs signed in the
US was for projects we either commissioned during the year
or are planning to bring online during 2023.
At the end of 2022, a significant part of the energy generation
from our asset portfolio of onshore wind and solar projects
across the US and Europe, including the UK, were contracted
with external counterparties with an average duration of
12 years. The contracted share for most individual projects
ranges from 65 % to 100 % and is dependent on the market,
project risk profile, attractiveness of the contract terms, and
the risk-reduction potential.
Most of our PPA counterparts are strategic customers whose
businesses span geographies and technologies. In this sense,
our diverse Onshore asset platform is commercially attrac-
tive and positions us as a trusted partner for companies
seeking to offtake green energy solutions.
Amazon Wind Farm, Scurry County, Texas, the US.
Ørsted annual report 202235
Management’s review Strategy and business | Executing our strategy
P2X
Renewable hydrogen and e-fuels are critically important in
the quest to decarbonise the global economy and to create
a world running entirely on green energy. They are the most
promising routes to decarbonise hard-to-electrify sectors,
such as heavy road transport, deep-sea shipping, aviation,
and the chemical industry. We have ambitious plans for
accelerating development of renewable hydrogen produc-
tion and e-fuels, and we made noteworthy progress across
several projects during 2022.
Strategic progress and expansion of our P2X portfolio
In December, we took FID on the FlagshipONE project,
a late-stage development project in Northern Sweden.
We expect to commission it in 2025. The facility comprises
a 70 MW electrolyser and is expected to deliver 50,000
tonnes of e-methanol from the renewable hydrogen
synthesised with biogenic carbon derived from the host
CHP plant. Once completed in 2025, this is expected to be
the largest e-methanol facility in Europe and will catalyse
the decarbonisation of the maritime sector.
During the past year, we expanded our P2X geographical
footprint to the US by agreeing on a landmark fuel supply
concept with A.P. Moller - Maersk to deliver 300,000 tonnes
of e-methanol to supply Maersk’s newly ordered e-methanol
vessels. The facility will comprise a 675 MW electrolyser
located on the US Gulf Coast, powered by approx. 1.2 GW of
dedicated renewable energy from onshore wind and solar PV.
Our ‘Green Fuels for Denmark’ project reached an impor-
tant milestone in 2022, as it was identified as an ‘Important
Project of Common European Interest’ (IPCEI). IPCEI projects
contribute to sustainable economic growth, job creation, and
the competitiveness of the EU economy and are key enablers
for maturing the European and global P2X industry to being
a genuine alternative to imported fossil fuels. The Danish
government has subsequently awarded DKK 600 million in
funding towards realising the first phases of ‘Green Fuels
for Denmark’, developing electrolysis capacities of 10 MW,
100 MW, and 300 MW, respectively. Once it is fully developed,
the project aims to reach a total installed electrolyser capac-
ity of 1.3 GW for producing green fuels for shipping, aviation,
and heavy road transport.
Another valuable step in 2022 for our ‘Green Fuels for Denmark’
project was that we signed a letter of intent with the Danish
district heating transmission companies. The agreement is to
utilise surplus heat from carbon capture and P2X at Avedøre
Power Station for district heating purposes. Avedøre Power
Station has been designated to capture and deliver part of
the carbon for the first phases of ‘Green Fuels for Denmark’.
In addition, the power station is also expected to supply
carbon for storage and serve as a hub for other actors with
carbon emissions in the Greater Copenhagen area.
We continue to work closely with Green Hydrogen Systems,
the electrolyser supplier, on their rectification of equipment
shortcomings to finalise the execution phase of our 2 MW
H2RES pilot project at Avedøre Power Station funded by the
Danish Energy Technology Development and Demonstration
Program (EUDP). The ongoing delay to first hydrogen, expect-
ed in H2 2023, is an important reminder that although the
P2X industry has a lot of potential, there are also significant
challenges in scaling up equipment manufacturing and
maturing the suppliers to meet society’s demands. Given
our experience in doing this within offshore wind, we con-
sider that this plays to our strengths, and we are extracting
valuable learnings from this early project.
Our hydrogen test facility at Avedøre Power Station,
Copenhagen, Denmark.
Lastly, we have continued to mature the rest of our port-
folio of P2X projects. Notably, our Haddock Project in the
Netherlands has been selected as one of the recipients of
funding in the Dutch government’s IPCEI tender, and Lingen
Green Hydrogen Project in Germany has been shortlisted as
an IPCEI project.
Ørsted annual report 202236
Management’s review Strategy and business | Executing our strategy
CHP plants and long-term
gas contracts
During 2022, we harvested the benefits of having a broad
portfolio of generation assets. Our combined heat and
power (CHP) plants not only filled the gap in production from
renewable generation, but also benefitted from high power
prices and attractive spreads.
In October, the Danish authorities ordered us to continue
operation of Esbjerg Power Station beyond Q1 2023 and to
resume operations of a coal-fuelled unit at the Studstrup
Power Station and an oil-fuelled unit at Kyndby to ensure the
security of electricity supply in Denmark. The order applies
until 30 June 2024.
To help secure the Danish gas supply for the 2022/2023
winter period, we took all possible measures to inject gas
into Danish gas storages under our capacity contracts during
the summer period. We also entered into a gas agreement
with Equinor under which Equinor will supply 8 TWh of
Norwegian gas to Denmark via Baltic Pipe from 1 January
2023 until April 2024, covering the period when the Tyra field
is not supplying gas to Denmark. The agreement strengthens
the security of supply in Denmark and will be supplementing
our purchase of biogas and gas from the South Arne field.
Together, these offtake agreements will more than cover
the consumption of our Danish and Swedish B2B customers.
Gazprom Export suspended its deliveries under the sourcing
contract from 1 June 2022. The contract with Gazprom
Export has subsequently been terminated pursuant to the
provisions in the contract due to long-term force majeure on
the part of Gazprom Export.
We initiated a process for identifying the right owner of our
Renescience business, including our waste treatment facility
in Northwich in the UK. The Renescience technology has
great potential to help solve the increasing global waste
challenge, and Ørsted has been a successful incubator for
the technology. However, waste treatment is no longer part
of our business model and strategic focus.
Studstrup Power Station, Studstrup, Denmark.
Ørsted annual report 202237
Management’s review Strategy and business | Executing our strategy
Risks and risk management
The purpose of our risk management is to identify and quan-
tify our risks and decide how best to manage and mitigate
them. We assess the extent to which individual risks are
acceptable or perhaps even desirable as well as the extent
to which these risks can be reduced to ensure an optimum
balance between risk and return. Besides business risks (incl.
financial risks), we are exposed to risks in connection with
legal compliance, climate change, ESG, and sustainability,
both at a strategic and operational level.
A large part of our earnings is generated from offshore wind,
with the UK and Continental Europe being the key contrib-
utors. However, with our expansions into the US and Asia
Pacific and into onshore wind, solar PV, and P2X, our future
earnings continue to be spread across more geographical
regions and technologies. Therefore, political and other
macroeconomic factors play an important role in our risk
management. When we invest in new assets and activities
or divest assets, the consolidated risks associated with our
portfolio change. Therefore, we assess the impact of a given
decision on the portfolio upfront.
We work systematically with risks. All business segments,
regions, and selected staff functions identify and prioritise
business risks. An assessment is made of the potential
financial impact of individual risks, and whether they are
of a short-term (0-2 years), a medium-term (2-5 years), a long-
term (5+ years), or a recurring nature. All our risks are then
consolidated and evaluated at Group level. The ultimate
responsibility for all individual risks rests with a member of
the Group Executive Team.
The top six business risks identified are shown to the right
where they are illustrated based on their potential impact
(post-risk mitigation) on our value and credit metrics over
the next years. You can read more about these risks on the
following pages.
We have similar processes in place for identifying and
prioritising risks related to ESG, sustainability, and legal
compliance. However, as these are assessed using different
parameters, we do not show them in a consolidated picture
together with the business risks. A description of the most
significant ESG and sustainability risks can be found in our
sustainability report.
Risks are a natural and integral part of our business activities,
and our risk profile changes continuously. We aim to mitigate
our risks and reduce them to an acceptable level through
risk management.
Top 6 business risks
Effect on our value and credit metric
→
Quantification of risks is based on a scenario where the risk
occurs with 10 % probability (P90). Our Internal Audit function
has examined the process for identifying and measuring the
accompanying portfolio risks.
Impact on FFO/adjusted net debt
Impact on value
1 (#1 in 2021)
Financial markets risks
2 (#4 in 2021)
Power prices and energy markets
3 (#3 in 2021)
Cost inflation and supply chains
4 (new in 2022)
Regulatory intervention
5 (#2 in 2021)
Competition
6 (#6 in 2021)
Cybersecurity
HighLow
High
5
6 4
2 1
3
Ørsted annual report 202238
Management’s review Strategy and business | Risks and risk management
In addition to our ordinary business risks, we are exposed to
risks which have a very small probability of occurring, but
which could potentially impact our finances and/or reputa-
tion substantially. These risks include, but are not limited to:
– fatal injuries
– strong hurricanes, typhoons, hailstorms, arctic blasts, or
earthquakes, especially in Taiwan, which may lead to the
partial loss of offshore and onshore wind farms, solar PV
farms, and storage assets
– broken pipes at the Nybro Gas Treatment Plant in
Denmark, which may lead to personal injury and damage
to the environment
– breakdowns at power stations that may lead to personal
injury and partial loss of assets.
After risk-reducing measures are implemented, the Group
Executive Team assesses whether the level of each risk is
appropriate, or if it is higher than the desired level. If the
risk level is still too high, further risk reducing measures are
initiated to the extent possible.
Climate-related risks
Climate change presents financial risk to the global economy.
To mitigate the impacts of climate change, it is important to
understand the risks (both physically and transitional) and
opportunities presented by rising temperatures, climate-related
policies, and emerging technologies in our changing world.
As climate-related risks and opportunities are directly
linked to our green vision and strategy, we address them as
an integral part of our daily business, and we report on them
as recommended by the Task Force on Climate-related
Financial Disclosures (TCFD). Read more about our climate-
related risks on page 41.
During the year, we have assessed whether our taxonomy-
eligible activities are taxonomy-aligned by determining
if they: 1) contribute substantially to climate change mitiga-
tion, 2) do no significant harm to the other environmental
objectives, and 3) comply with the minimum safeguards.
Our assessment showed that all our eligible activities
were aligned.
Development in risks during 2022
We have introduced ‘Regulatory intervention’ as a new top 6
risk in 2022 and have seen changes in the relative importance
of our top risks from last year.
‘Financial markets risks’ (previously ‘Inflation and interest
rates’ and ‘Currency risks’) remain our number 1 risk. During
the year, we have seen a substantial increase in inflation and
interest rates across the regions where we operate as well as
volatility in the foreign exchange markets.
‘Power prices and energy markets’ (previously ‘Currencies
and energy prices’) have been moved up as our second
largest risk in 2022. The recent surge in energy prices have
led to an increase in this risk assessment. As a response to the
unintended impacts from hedges, we have established and
are in the process of implementing a new risk management
framework to reduce the volatility from financial instruments
and bring back the inherent predictability of earnings that
our contracted and regulated activities possess.
‘Cost inflation and supply chains’ remain our third largest
risk in 2022. The still increasing cost inflation and, to some
extent, COVID-19-related delays remain in the market.
‘Regulatory intervention’ is placed as our fourth largest risk.
With the increasing power prices throughout Europe, the
governing bodies have started to implement price caps or
windfall taxes to help businesses and consumers with
their increasing power bills. This could have an adverse
impact on our revenue from power generating activities if
implemented without consideration of fixed-price contracts
and hedged volumes.
‘Competition’ remains in our top six risks, but has dropped
down to our fifth largest risk, mainly because the other risks
have increased in magnitude.
‘Cybersecurity’ remains our sixth largest risk. The geopolitical
development over the past year has shown that cyberattacks
remain a threat to our operations. It is of the utmost impor-
tance that we protect our infrastructure and systems from
malicious attacks.
COVID-19
During the year, we have seen some adverse impacts of
the pandemic, mainly related to our supply chain. While
COVID-19-related lockdowns among our suppliers had some
adverse impact on the construction timeline for some of our
projects, we expect these delays to only result in a limited
overall impact on the project economics.
Ørsted annual report 202239
Management’s review Strategy and business | Risks and risk management
1. Financial markets risks
Description
Our financial markets risks are related to volatility
in the macroeconomic environments where we
operate. Changes to inflation rates, interest rates,
and foreign exchange rates all have an impact on
the value of our assets.
To a certain extent, our medium- to long-term
earnings can be expected to follow the devel-
opment in consumer and market prices, thereby
protecting the real value of our assets and equity.
This is the case for earnings related to our UK wind
farms. However, we are exposed to inflation risk
on projects with fixed nominal cash flows, as an
increase in inflation will erode the expected real
value of the revenue.
Our largest currency exposure stems from offshore
wind farms in the UK, but activities in the US and
Taiwan have increased our exposure to USD and
NTD significantly.
Potential impact
Fluctuations in interest rates, inflation, and foreign
exchange rates may adversely impact our earnings
and the value of our assets.
Based on our GBP exposure after hedges, a 10 %
decrease in the GBP/DKK exchange rate will result
in a loss of DKK 1.4 billion over the period 2023-
2027, all else remaining unchanged.
Mitigating actions
Our inflation and interest rate exposures are
managed by matching assets and liabilities in the
same currency and with similar payment structures.
Our currency exposure is managed by actively
hedging within the first five years.
Read more about inflation and interest rate risks
in note 6.4 and currency risks in note 6.2.
2. Power prices and energy markets
Description
Power price risks primarily originate from the sale
of our renewable power generation in the UK,
the US, and north-western Europe. Our CHP plants
entail a spread risk due to the difference between
the prices of the power generated and the fuel
consumed.
Furthermore, we are exposed to second-order risks
arising from power price hedges not fully matching
our actual revenue exposure (ie. position, intermit-
tency, and regulatory risks). We are also exposed to
liquidity risks, as we are required to post collateral
at exchanges if our positions are ‘out of the money’.
Potential impact
Fluctuations in energy prices and energy policies
can have an adverse effect on our earnings and/
or liquidity.
During 2022, we saw negative effects from volume-
related overhedging of DKK 3.8 billion due to lower
generation combined with soaring energy prices.
There is a risk that we could see the same effects
in 2023 if our power generation falls short of the
hedged volumes, and the energy prices increases.
Based on our power price exposure after hedges,
a 10 % decrease in the power price will result in a
loss of DKK 4.0 billion over the period 2023-2027,
all else remaining unchanged for our offshore and
onshore assets.
Mitigating actions
To keep cash flows stable, we have historically
hedged energy prices for up to five years.
Based on a review of our hedging needs and
learnings over the recent 18 months of unintended
impacts of high hedge levels together with signif-
icant changes in market prices and volatility, we
have adjusted our hedging policy to encompass a
shorter hedging horizon and lower hedge levels.
Read more about energy price risks and our new
hedging framework in notes 6.1 and 6.3.
3. Cost inflation and supply chains
Description
As a global renewable energy developer, we are
exposed to risks related to cost inflation, supply
chain bottlenecks, performance of new suppliers,
and suppliers’ financial positions, including from
derived consequences of COVID-19.
Among other things, we are exposed to highly
volatile prices, which are influenced by high global
demand with widespread application in various
sectors. As the industry grows with continuous
new technological developments, we are exposed
to potential bottlenecks in parts of the supply
chain if there is only a limited number of suppliers
capable of meeting the future demands. Therefore,
it is important that new suppliers enter and stay in
the market. We are also exposed to counterparty
risks if one of our suppliers should default or deliver
unsatisfactory products.
Furthermore, we are exposed to import restrictions
and price increases related to trade restrictions.
Potential impact
Disruptions in the supply chain or sudden inflation
in key materials could result in project delays and
budget overruns.
An example of a supply chain bottleneck is the
limited number of vessels with sufficient lifting
capacity due to the increase in wind turbine and
foundation size. These technical limitations coupled
with an increased demand for offshore wind have
increased the market price for installation vessels
with up to 75 %.
Mitigating actions
To combat cost inflation, we have implemented a
hedging programme for steel and other commod-
ities, which will be rolled out to our asset projects.
Furthermore, we enter into volume agreements and
source wind turbines from key suppliers in a timely
manner to reduce uncertainty.
Our process for vetting new suppliers is thorough,
and we have strict credit risk policies in place to
manage credit and counterparty risks.
4. Regulatory intervention
Description
Following the recent spike in European energy
prices, regulators have introduced energy price caps
and windfall taxes to alleviate the financial burden
of higher energy prices for businesses and con-
sumers. A new regulation, still subject to national
implementation, is one of the regulatory initiatives
being issued. It will be aimed at temporarily capping
revenues for electricity producers – notably wind,
solar PV, and nuclear.
Hence, in the EU, a revenue cap of EUR 180/MWh
will initially be in place from 1 December 2022 until
30 June 2023. Important for Ørsted, the revenue
cap regulation should reflect actual revenue by
taking hedges and other risk mitigation measures
properly into account. We are in constructive dia-
logue about this with governments in the markets
where we operate.
In the UK, regulators have announced the
‘Electricity Generator Levy’, which entails a 45 %
additional levy on revenue above GBP 75/MWh,
effective from 1 January 2023 to 31 March 2028.
Furthermore, in Ireland, a EUR 120/MWh cap was
implemented on 1 December 2022.
Potential impact
After hedges, fixed-price contracts, and the
guaranteed German subsidy levels have been
considered in the final regulation, the potential
impact on Ørsted is significantly reduced. However,
given the complexity associated with hedging
strategies, including in which countries and legal
entities these activities are performed, there is
a risk that national implementation of any such
regulation is counterproductive. Hence, an effect on
revenue from our UK ROC wind farms, our offshore
assets in Germany, the Netherlands, and Denmark,
and our onshore assets in Ireland may occur.
Our Danish multi-fuelled combined heat and
power plants will to a large extent be exempted
from the cap.
Mitigating actions
We are in constructive dialogue with governments
in the markets where we operate.
Ørsted annual report 202240
Management’s review Strategy and business | Risks and risk management
5. Competition
Description
Global renewable energy markets are expected
to grow rapidly over the next decade in all the
technological areas where we are present. Key
drivers for this growth are ambitious government
policies and targets, the push from corporates for
the green transition, and significant cost reductions.
Competition in the renewable energy industry
is intensifying, driven by the increasing market
opportunities. New players are entering the market,
not least the oil majors, who are increasingly setting
high targets for their build-out of renewable energy.
Lately, we have seen some of the consequences
of the new competitive landscape. Many auctions,
tenders, and lease rounds have been awarded to
bidders at extreme prices (i.e. Japan’s first fixed-
bottom offshore wind auction, the New York Bight
seabed lease sale, and the Crown Estate’s UK
seabed leasing round 4).
Potential impact
These extreme awarded prices propose a risk for
the entire renewable build-out where it will not
be possible to sustain a healthy and sustainable
renewable global business.
In addition, there is a risk that we will not win the
targeted capacity in the auctions and tenders in
which we participate.
Mitigating actions
To ensure our competitive edge, we will continue
to utilise portfolio-scale advantages and knowhow
gained from previously executed projects to devel-
op supply chain solutions and reduce costs and risks.
Over the last years, we have established a dedi-
cated P2X business and entered into key strategic
partnerships in new markets to ensure our
competitiveness.
6. Cybersecurity
Description
The cybersecurity risks are a product of individu-
als, groups, and nations actively working to harm
and profit off of Ørsted. As a green energy major,
we are exposed to several different cyberattack
threats: ransomware attacks, data exfiltration
attacks, cyber-physical impact attacks, and more.
Our adversaries’ capacities and capabilities are
constantly improving, and we must strive to
stay ahead.
Furthermore, the energy crisis and ongoing war in
Ukraine have resulted in an increased cyber threat
from a geopolitical context where Russian hackers
have been known to target energy grids and assets.
Potential impact
Minor digital risk events, such as viruses and
attempted break-ins, are everyday risks without
significant impact. However, major cyberattacks
or events may impact all or part of our assets or,
in the event of a ransomware attack, have an
impact on our financial position.
Mitigating actions
We face different types of cyber risks. Some are
related to our assets and some to our systems.
Thus, we mitigate cyber risks with several different
initiatives, which are continuously assessed and
prioritised based on our strategic cybersecurity
risk assessment with the aim of lowering our risk
exposure.
At our operating assets, we have deployed
production cyber defences to enhance protection
against onsite and offsite attacks. In addition,
we have a top-level ‘Information and cybersecurity
policy’ supported by our global governance model,
we have regular trainings, and we participate in
fora on information and knowledge sharing.
This way, our cyber capability is continuously
improved in order to identify, protect, detect,
respond, and recover across the enterprise and
production sites.
Legal compliance
Description
Risks associated with legal compliance are
assessed based on financial and reputational
significance and probability. Our most signifi-
cant risks are 1) tax law, 2) financial regulation,
and 3) offshore grid code compliance. (1)
We operate in tax regimes with different tax
rules and rates, and our tax affairs span over
corporate tax compliance, transfer pricing, and
indirect taxes. (2) We are subject to several
financial regulations, such as REMIT, MAR,
EMIR, Dodd Frank, MiFID, SFTR, and AML1. The
financial regulations are relevant for a large
part of our activities. (3) In every country where
we operate, we have to meet certain grid code
requirements set by the transmission system
operator (TSO) to be allowed to generate and
supply electricity to the grid.
Potential impact
Failure to comply with the above-mentioned
rules and regulations may result in severe legal
sanctions, such as imprisonment, fines, and
damage claims, but also in possible disconnec-
tion from the grid or loss of generation license.
Mitigating actions
(1) We have implemented a comprehensive tax
control framework and mandatory compliance,
including transfer pricing documentation, in line
with the OECD recommendations and local
requirements. This has been prepared on a
contemporary basis to mitigate our tax risks.
(2) We have implemented comprehensive
policies, procedures, training, and controls
for relevant parts of our business to ensure
compliance with financial regulations.
(3) We have implemented grid code govern-
ance to provide clear responsibility, and we
have a ‘compliance critical systems’ project
underway to help our sites identify what
systems are critical and ensure suitable meas-
ures for reliability.
Climate-related risks
Description
Changes in the world’s climate constitute both
a risk and an opportunity for us. In October,
the International Energy Agency (IEA) launched
their World Energy Outlook report, which
supports the Intergovernmental Panel on
Climate Change (IPCC) conclusion that it is
unequivocal that human activity causes global
warming, and that we are on course to reach
the critical point of 1.5 °C of warming already
in the early 2030s. IEA now puts us on a path
towards 1.7 °C.
Potential impact
Failure to adhere to the 1.5 °C limit may cause
severe changes in the worlds’ climate and
make catastrophic events more severe and
frequent. This could not only have an adverse
effect on our planet, but on our operating
assets as well.
Mitigating actions
In accordance with the recommendations
set out by the Task Force on Climate-related
Financial Disclosures (TCFD), we seek to exploit
climate-related opportunities and be a part of
the solution through development and genera-
tion of renewable energy.
At the same time, we seek to reduce the risks
related to climate change by encouraging reg-
ulators and public authorities to set ambitious
renewable energy targets, improving the com-
petitiveness of green technologies, assessing
acute and chronic weather development, and
taking extreme weather conditions and events
into account when designing and building our
assets.
Furthermore, we take climate-related risks
and opportunities into account when we
prepare business cases for investment in new
assets or activities. By doing this, we seek to
avoid ending up with stranded assets or assets
and activities with a significantly lower value
than originally expected.
Ørsted annual report 202241
Management’s review Strategy and business | Risks and risk management
Results
43 Follow-up on 2022 guidance
44 Results
48 Five-year summary
49 Fourth quarter
54 Quarterly summary, 2021-2022
Ørsted’s pre-commencement community
fund in Choczewo in Poland supports local
sustainable development projects in the area
from 2022 to 2024. The fund will focus on social
development, safety, local meeting places,
cultural and natural heritage, and children and
youth and will be allocated in close collabora-
tion with local communities.
Ørsted annual report 202242
Management’s review
Follow-up on 2022 guidance
Full-year EBITDA
Operating profit (EBITDA) excluding new
partnerships totalled DKK 21.1 billion com-
pared to our expectations at the beginning
of the year of DKK 19-21 billion.
The further increase in the level and volatility
of energy prices throughout most of the year,
together with a substantial increase in infla-
tion, led to a significantly different composi-
tion of EBITDA than our initial expectations.
Earnings in Offshore ended up lower than
expected, mainly due to volume-related
overhedging (DKK 2.9 billion), ineffective
hedges related to inflation indexation
(DKK 0.7 billion), and other IFRS 9-related
ineffective hedges (DKK 1.6 billion). We also
saw higher balancing costs and BSUoS/
TNUoS tariffs than expected. Further delays
in the installation process and with the com-
missioning of turbines at Greater Changhua
1 & 2a resulted in lower ramp-up generation
and lower partnership earnings. This was
partly offset by a lower-than-expected
DEVEX and positive effects from reversal
of provisions incl. CPS issues.
Earnings in Onshore ended up significantly
higher due to higher achieved prices in both
the US and Europe. Furthermore, the acquisi-
tions of Ostwind and Ford Ridge contributed
positively.
Earnings from our CHP plants increased
due to the higher power prices. As we only
hedge the power we cogenerate with heat,
we benefitted from the high prices on our
condensing power generation.
In ‘Gas Markets & Infrastructure’, we achieved
higher earnings from our gas storage activi-
ties and release of a provision related to the
close-down of our B2B business in the UK.
Q4 EBITDA
Neither the development in nor the composi-
tion of our earnings mix were as expected in
our 9M report.
In Offshore, we had to recognise a nega-
tive effect from ineffectiveness related to
inflation-indexed contracts with partners,
a reduction in the value of intermittency
hedges (part of volume-ineffective hedges),
and we saw higher balancing costs. In addi-
tion, the delays at Greater Changhua 1 & 2a
had a negative impact.
In Bioenergy & Other, we realised signifi-
cantly higher-than-expected earnings from
our gas storage activities and released a
provision related to our B2B business. This
was partly offset by lower earnings from
our CHP plants due to lower-than-expected
power prices.
2021 15.8
Wind impact 2021 2.0
EBITDA excluding new partnerships
DKKbn
Sites and tax credits 1.4
Other, incl. DEVEX -0.3
Expected 2022 20
Sites, other -0.5
Onshore 1.2
Gas markets -1.6
Hedges -5.2
Other existing partnerships 1.1
Gas markets 2.8
CHP plants -0.6
Wind impact -0.2
Greater Changhua 1 CA -0.6
CHP plants 3.2
Other -0.2
Ramp-up -1.5
Other, incl. DEVEX 0.6
Other 0.2
2022 21.1
Sites, other 2.3
Existing partnerships 1.7
Other, incl. DEVEX -0.5
Offshore
Onshore
Offshore
Bio & Other
Bio & Other
Ørsted annual report 202243
Management’s review Results | Follow-up on 2022 guidance
Results
Financial results
Revenue
Power generation from offshore and
onshore assets increased by 34 % and
totalled 29.6 TWh in 2022. The increase
was due to ramp-up of generation from
Hornsea 2, Western Trail, Haystack,
Lincoln Land, Old 300, the wind part of
Helena Energy Center, the acquisition of
Ford Ridge, the full-year effects from I&UK
assets acquired during 2021, and higher
wind speeds, partly offset by the 50 %
farm-down of Borssele 1 & 2 in May 2021.
Heat generation amounted to 6.4 TWh,
19 % lower than last year, mainly due to
warmer weather. Thermal power genera-
tion decreased by 13 % and amounted to
6.0 TWh.
Lower CHP generation (warmer weather)
was partly offset by higher condensing
power generation.
Our renewable share of generation was
91 % in 2022, 1 percentage point higher
than last year, driven by a higher share
of generation from offshore and onshore
renewables, partly offset by higher CHP
generation on coal due to scarcity of sus-
tainable biomass and as we had to switch
to coal at Studstrup 3.
Revenue amounted to DKK 132.3 billion.
The increase of 70 % relative to 2021 was
primarily due to the significantly higher
power prices across all markets.
EBITDA
Operating profit (EBITDA) totalled
DKK 32.1 billion, of which the gain from
the 50 % farm-downs of Hornsea 2 and
Borkum Riffgrund 3 amounted to DKK 9.4
billion and DKK 1.6 billion, respectively.
Thus, EBITDA excluding new partnerships
amounted to DKK 21.1 billion, an increase
of DKK 5.3 billion compared to last year.
Earnings from Offshore sites amounted
to DKK 9.9 billion, a decrease of DKK 3.1
billion compared to last year.
‘Wind impact’ was positive with DKK 1.7
billion due to higher wind speeds than
last year (DKK -0.2 billion versus a normal
wind year).
Impact from ‘hedges’ was negative with
DKK 3.7 billion in 2022 compared to last
year (2022 was negatively impacted
by DKK 5.6 billion, whereas 2021 was
negatively impacted by DKK 1.9 billion).
This was due to ineffectiveness related to
inflation-based contracts with partners
2021 OtherOther,
incl.
DEVEX
Hedges Temp.
IFRS 9
adj.
Other,
incl.
DEVEX
Wind 2022SitesSites,
other
2022
excl.
temp.
IFRS 9
adj.
CHPsExisting
partner-
ships
Gas &
other
15.8
0.0
1.3
1
-3.7
1.7
-0.1
22.4
EBITDA excluding new partnerships
DKKbn
21.1
-1.2
Bio & Other
1.2
-0.4
2.3
2.7
Offshore Onshore
2.7
Financial results
DKKm 2022 2021 %
Revenue 132,277 77,673 70 %
EBITDA 32,057 24,296 32 %
New partnerships 10,993 8,507 29 %
EBITDA excl. new partnerships 21,064 15,789 33 %
Depreciation and amortisation (9,754) (7,972) 22 %
Impairment (2,529) (129) 1,860 %
Operating profit (loss) (EBIT) 19,774 16,195 22 %
Gain (loss) on divestment of enterprises 331 (742) n.a.
Financial items, net (2,536) (2,166) 17 %
Profit before tax 17,609 13,277 33 %
Tax on profit (loss) for the year (2,613) (2,390) 9 %
Tax rate 15 % 18 % (3 %p)
Profit (loss) for the year 14,996 10,887 38 %
1 Absolute effect from IFRS 9 hedge effects
Ørsted annual report 202244
Management’s review Results | Results
In 2022, regulated and quasi-regulated activities and contracted activities
accounted for 45 % and 49 % of our EBITDA, respectively, whereas market-
exposed activities accounted for 6 %.
(DKK 0.7 billion), negative effects from
volume-related overhedging (DKK 2.6 billion),
and IFRS 9-related ineffective hedges
(DKK 0.4 billion).
Earnings from ‘Sites, other’ decreased with
DKK 1.2 billion, mainly due to a negative
impact from high prices and volatility (bal-
ancing costs), from expanding our portfolio
(higher OPEX, BSUoS, and TNUoS tariffs),
and from the 50 % farm-down of Borssele.
This was partly offset by ramp-up of gener-
ation at Hornsea 2, higher achieved prices
from one-sided German CfD sites, and from
value-creating market trading activities.
EBITDA from partnerships amounted to
DKK 12.3 billion and was mainly related to the
DKK 9.4 billion and DKK 1.6 billion gains from
the 50 % farm-downs of Hornsea 2 and Borkum
Riffgrund 3 (new partnerships), respectively.
Earnings from existing partnerships amount-
ed to DKK 1.3 billion compared to a loss
of DKK 1.0 billion in 2021. In 2022, we had
positive earnings from finalised projects and
construction work for partners at Greater
Changhua 1. In addition, we reversed DKK 0.5
billion of the DKK 0.8 billion warranty pro-
vision towards our partners we recognised
in 2021 related to cable protection system
issues at some of our offshore wind farms.
EBITDA
DKK 32.1 bn
EBITDA
DKKbn
Offshore 62 % Onshore 11 %
Bioenergy &
Other 27 %
24.3
2021
32.1
2022 New partnerships
EBITDA in Onshore increased by DKK 2.3
billion to DKK 3.6 billion, driven by ramp-up
of generation and higher achieved prices
across the portfolio.
EBITDA from our CHP plants amounted to
DKK 5.9 billion, an increase of DKK 2.6 billion
compared to last year. The increase was
mainly due to higher power prices. As we in-
itially only hedge the power we cogenerate
with heat, we have been able to benefit from
the high power prices on our condensing
power generation.
EBITDA from our gas business contributed
with earnings of DKK 3.1 billion in 2022,
DKK 1.3 billion higher than last year, with
some offsetting effects. We saw a positive
effect from optimising our north-western
European gas activities, where we were able
to lock in gains from the offtake flexibility
in some of our sourcing contracts and at
gas storages. In addition, we had a positive
effect from our B2B activities in the UK, where
we released part of the provision for closing
down the business. In contrast, our decision
during the spring to unwind gas hedges
related to the Gazprom Export contract to
balance our risk, if gas supplies from Russia
were ceased, led to a net loss on the Gazprom
Export sourcing contract in the first half of
the year. Furthermore, 2021 was positively
impacted by renegotiation of gas purchase
contracts and earnings from optimising pur-
chase via our long-term gas contracts.
Impairment
Impairment losses amounted to DKK 2.5
billion in 2022 and was related to our Sunrise
Wind project in the US, driven by supply
chain bottlenecks, cost inflation, and higher
costs of capital.
EBIT
EBIT increased by DKK 3.6 billion to DKK 19.8
billion in 2022. The higher EBITDA was partly
offset by impairment losses and higher de-
preciation from more assets in operation.
Financial income and expenses
Net financial income and expenses amount-
ed to DKK -2.5 billion compared to DKK -2.2
billion in 2021. The higher net expenses were
mainly due to higher interest expenses and
capital losses on the bond portfolio (net of
related interest rate swaps) due to increasing
interest rates and higher agreed returns on
tax equity contributions due to more onshore
assets in operation, only partly offset by
positive exchange rate adjustments.
Tax and tax rate
Tax on profit for the period amounted to
DKK 2.6 billion, DKK 0.2 higher than 2021.
The effective tax rate was 15 % and was im-
pacted by the tax-exempt gains of DKK 10.9
billion from the 50 % farm-downs of Hornsea
2 and Borkum Riffgrund 3, the recognition of
deferred taxes related to tax equity contribu-
tions in the US, and by prior year adjustments.
Profit for the year
Profit for the year totalled DKK 15.0 billion,
DKK 4.1 billion higher than in 2021. The in-
crease was mainly due to the higher EBIT.
Ørsted annual report 202245
Management’s review Results | Results
Cash flows and net debt
Cash flows from operating activities
Cash flows from operating activities totalled
DKK 11.9 billion in 2022 compared to DKK 12.1
billion in 2021.
During 2022, we tied up additional DKK 6.9
billion, net, in variation margin payments
on unrealised hedges (part of ‘Change in
derivatives’) and initial margin payments
at clearing houses (part of ‘Change in other
working capital’) due to the increasing and
volatile power and gas prices:
– The variation margin payments were a
cash outflow of DKK 10.4 billion vs. a cash
inflow of 0.6 billion in 2021. DKK 2.0 billion
of the outflow in 2022 related to power
hedges in Offshore, and DKK 8.4 billion
related to gas hedges in Bioenergy & Other.
– The initial margin payments were a cash
inflow of DKK 3.5 billion vs a cash outflow
of DKK 7.3 billion in 2021.
– During the second quarter, we issued
parent company guarantees in total of
EUR 1 billion, which reduced our initial
margin payments.
The negative impact from variation margin
payments included in ‘Change in derivatives’
was partly offset by the reversal of unrealised
market trading results and ineffective hedges.
In 2022, we had a net cash inflow from work
in progress of DKK 4.3 billion, mainly from
the farm-down of 50 % of the offshore trans-
mission asset at Hornsea 2 and milestone
payments received at Borkum Riffgrund 3,
partly offset by construction work at Greater
Changhua 1. In 2021, we had a net cash inflow
of DKK 4.5 billion, mainly from the divest-
ment of the Hornsea 1 offshore transmission
asset and milestone payments received at
Greater Changhua 1, only partly offset by
construction work regarding the offshore
transmission asset at Hornsea 2.
In 2022, cash inflows from tax equity contri-
butions were more than offset by tax equity
reversals, whereas we had a large inflow of
tax equity contributions in 2021.
Furthermore, the positive effect in ‘Change
in other working capital’ from lower initial
margins was partly offset by higher fuel
inventories and lower payables.
Investments and divestments
Gross investments amounted to DKK 37.4
billion in 2022. The main investments were:
– offshore wind farms (DKK 26.7 billion),
including Greater Changhua 1 & 2a in
Taiwan, Hornsea 2 in the UK, and our
portfolio of US and German projects
– onshore wind and solar PV farms (DKK
10.4 billion), including the acquisitions of
Ostwind and Ford Ridge as well as the
construction of Old 300, Sunflower Wind,
Helena Energy Center, Eleven Mile, and
our portfolio of European projects.
Divestments amounted to DKK 25.6 billion
in 2022 and were mainly related to the
50 % farm-downs of Hornsea 2 and Borkum
Riffgrund 3 with proceeds (NIBD impact)
of DKK 22.2 billion and DKK 1.9 billion,
Key ratios
DKKm, % 2022 2021 %
ROCE 16.8 14.8 2 %p
Adjusted net debt 42,075 39,774 6 %
FFO/adjusted net debt 42.7 26.3 16 %p
Cash flows and net debt
DKKm 2022 2021 %
Cash flows from operating activities 11,924 12,148 (2 %)
EBITDA 32,057 24,296 32 %
Reversal of gain (loss) on divestment of assets (10,885) (7,920) 37 %
Change in derivatives, excl. variation margin 1,645 (2,678) n.a.
Change in variation margin (10,332) 627 n.a.
Change in provisions (1,935) (158) 1125 %
Other items (278) (262) 6 %
Interest expense, net (563) (467) 21 %
Paid tax (1,263) (1,380) (8 %)
Change in work in progress 4,271 4,466 (4 %)
Change in tax equity partner liabilities (353) 3,678 n.a.
Change in other working capital (440) (8,054) (95 %)
Gross investments (37,447) (39,307) (5 %)
Divestments 25,636 21,519 19 %
Free cash flow 113 (5,640) n.a.
Net debt at 1 January 24,280 12,343 97 %
Free cash flow (113) 5,640 n.a.
Dividends and hybrid coupons paid 6,052 5,581 8 %
Addition of leasing obligations 1,598 2,742 (42 %)
Issuance of leasing hybrid capital, net (1,747) (4,356) (60 %)
Exchange rate adjustments, etc. 501 2,330 (78 %)
Net debt at 31 December 30,571 24,280 26 %
Gain (loss) on sale of assets is part of EBITDA, but is presented as part of the
‘divestment’ cash flow. The EBITDA effect is thus reversed in the specification
of cash flows from operating activities.
ROCE and FFO/adjusted net debt is specified in notes 2 and 5.1
Ørsted annual report 202246
Management’s review Results | Results
Taxonomy-aligned KPIs
The taxonomy-aligned share of revenue
was 73 %, EBITDA was 85 %, gross
investments was 99 %, and OPEX was
80 % in 2022. The non-eligible part of
our revenue primarily concerned our
long-term legacy activities related to
sourcing and sale of gas (16 % of revenue
in 2022), coal-based generation, and
non-eligible power sales. We expect the
share of taxonomy-aligned revenue to
increase in the coming years.
Read more about our EU taxonomy-
aligned KPIs in notes 2.1-2.5 in the ESG
performance report for 2022.
See our full EU taxonomy reporting
in our ESG performance report:
orsted.com/ESGperformance2022.
respectively, and payments from our 25 %
partner in Ocean Wind 1. In 2021, divestments
amounted to DKK 21.5 billion and were
mainly related to the 50 % farm-downs of
Borssele 1 & 2 and Greater Changhua 1. In
addition, we completed the divestment of
a portfolio of four onshore projects in 2022,
with no impact on EBITDA, divestments cash
flow, or NIBD.
Interest-bearing net debt
Interest-bearing net debt totalled DKK
30.6 billion at the end of December 2022
against DKK 24.3 billion at the end of 2021.
The increase was mainly due to dividend
payments of DKK 5.7 billion and higher net
lease obligations of DKK 1.6 billion, partly
offset by net issuance of hybrid capital in
2022. Free cash flow was positive with DKK
0.1 billion. At the end of 2022, we had posted
DKK 14.0 billion as collateral at exchanges.
Equity and capital employed
Equity
Equity was DKK 95.5 billion at the end of
December 2022 against DKK 85.1 billion at
the end of 2021. At the end of 2022, the post-
tax hedging and currency translation reserve
amounted to a loss of DKK 26.5 billion.
The reserve will be matched by higher future
revenue from the underlying activities when
the contracts fall into delivery. Approx. 30 %
of the reserve will materialise before 31
December 2023.
Capital employed
Capital employed was DKK 126.1 billion
at the end of December 2022 against
DKK 109.4 billion at the end of 2021, mainly
due to new investments.
Financial ratios
Return on capital employed (ROCE)
Return on capital employed (ROCE) was
16.8 % in 2022. The increase of 2.0 percentage
points compared to last year was attributa-
ble to a higher EBIT.
Credit metric (FFO/adjusted net debt)
The funds from operations (FFO)/adjusted
net debt credit metric was 42.7 % in 2022
against 26.3 % last year. The increase was
mainly due to higher FFO.
During the year, we updated the definition
of our FFO/adjusted net debt ratio. We have
excluded variation margin payments in our
FFO definition to reflect the changes imple-
mented by the rating agencies. Furthermore,
we have excluded ‘other interest-bearing
debt’ and ‘other interest-bearing receivables’
from our adjusted net debt to align with the
common methodology used by the rating
agencies. We have restated comparison
numbers for 2022 and 2021 accordingly.
See note 5.1 for definitions.
ESG results
Green share of heat and power generation
The green share of heat and power genera-
tion amounted to 91 % in 2022 compared to
90 % in 2021. The 1 percentage point increase
was driven by more wind and solar assets in
operation and higher wind speeds, partially
offset by higher coal-based generation and
lower sustainable biomass-based generation.
Greenhouse gas emissions
Our greenhouse gas emissions from heat and
power generation (scope 1 and 2) increased by
17 % compared to 2021 to 2.5 million tonnes
CO
2
e due to increased use of coal in our
thermal heat and power generation due to
scarcity of supply of biomass in the first part of
the year and a switch from biomass to coal at
Studstrup 3 due to a fire in a wood pellet silo.
Greenhouse gas intensity from our heat
and power generation and other operating
activities increased to 60 g CO
2
e/kWh in 2022
against 58 g CO
2
e/kWh in 2021. The increase
was driven by the increased use of coal in the
thermal heat and power generation, partly
offset by higher wind and solar generation.
Greenhouse gas emissions from our supply
chain and sales activities (scope 3) decreased
by 40 % to 11.0 million tonnes in 2022. This
was primarily due to a 48 % decrease in gas
sales and a 10 % reduction in emissions from
commissioning of renewable assets.
Safety
In 2022, we had 78 total recordable inju-
ries (TRIs), of which 52 injuries were related
to contractors’ employees. This was an
increase of 4 injuries compared to last year.
The number of hours worked was 24.8
million hours, same as in 2021. The total
recordable injury rate (TRIR) increased from
3.0 in 2021 to 3.1 in 2022.
Ørsted annual report 202247
Management’s review Results | Results
Five-year summary
1 For 2021-2018, these business drivers are for US only. Whereas they are
for the whole portfolio from 2022.
Financial statements
DKKm 2022 2021 2020 2019 2018
Income statement
Revenue 132,277 77,673 50,151 70,398 75,520
EBITDA 32,057 24,296 16,598 19,020 28,491
Offshore 19,569 18,021 14,451 14,503 26,305
Sites, O&M, and PPAs 9,940 13,059 15,177 13,092 9,538
Construction agreements and divestment gains 12,277 7,535 1,593 3,765 18,765
Other, incl. project development (2,648) (2,573) (2,319) (2,354) (1,998)
Onshore 3,644 1,349 1,112 801 509
Bioenergy & Other 8,619 4,747 824 3,551 1,603
Other activities 225 179 210 166 74
Depreciation and amortisation (9,754) (7,972) (7,588) (6,864) (5,978)
Impairment (2,529) (129) - (568) 603
Operating profit (loss) (EBIT) 19,774 16,195 9,010 11,588 23,116
Gain (loss) on divestment of enterprises 331 (742) 10,831 (63) 127
Net financial income and expenses (2,536) (2,166) (2,524) (1,135) (1,278)
Profit (loss) before tax 17,609 13,277 17,324 10,392 21,966
Ta x (2,613) (2,390) (1,776) (3,101) (3,700)
Profit (loss) for the year 14,996 10,887 15,537 7,235 18,276
Balance sheet
Assets 314,142 270,385 196,719 192,860 174,575
Equity 95,532 85,137 97,329 89,562 85,115
Shareholders in Ørsted A/S 71,743 64,072 81,376 73,082 68,488
Non-controlling interests 3,996 3,081 2,721 3,248 3,388
Hybrid capital 19,793 17,984 13,232 13,232 13,239
Interest-bearing net debt 30,571 24,280 12,343 17,230 (2,219)
Capital employed 126,103 109,416 109,672 106,792 82,896
Additions to property, plant, and equipment 33,662 43,941 28,442 22,440 14,436
Cash flows
Cash flows from operating activities 11,924 12,148 16,466 13,079 10,343
Gross investments (37,447) (39,307) (26,967) (23,305) (24,481)
Divestments 25,636 21,519 19,039 3,329 19,950
Free cash flow 113 (5,640) 8,538 (6,897) 5,812
Financial ratios
Return on capital employed (ROCE), % 16.8 14.8 8.3 12.2 30.2
FFO/adjusted net debt, % 42.7 26.3 65.0 31.0 69.0
Number of outstanding shares, 31 December, ’000 420,209 420,175 420,068 419,985 420,045
Share price, 31 December, DKK 631 835 1,244 689 436
Market capitalisation, 31 December, DKKbn 265 351 522 290 183
Earnings per share (EPS), DKK 34.6 24.3 38.8 12.8 45.3
Dividend yield, % 2.1 1.5 0.9 1.5 2.2
Business drivers 2022 2021 2020 2019 2018
Offshore
Decided and installed capacity, GW 11.1 10.9 9.9 9.9 9.0
Installed capacity, GW 8.9 7.6 7.6 6.8 5.6
Generation capacity, GW 4.7 4.0 4.4 3.6 3.0
Wind speed, m/s 9.5 9.1 10.0 9.2 9.1
Load factor, % 42 39 45 42 42
Availability, % 94 94 94 93 93
Power generation, GWh 16,483 13,808 15,248 11,965 10,042
Power sales, GWh 33,745 25,020 29,152 27,615 27,434
Onshore
Decided and installed capacity, GW 6.2 4.7 3.4 2.1 1.0
Installed capacity, GW 4.2 3.4 1.7 1.0 0.8
Wind speed¹, m/s 7.4 7.4 7.6 7.3 7.3
Load factor¹, wind, % 40 42 45 45 41
Load factor¹, solar PV, % 25 24 - - -
Availability¹, wind, % 93 96 96 98 -
Availability¹, solar PV, % 98 96 - - -
Power generation, GWh 13,146 8,352 5,738 3,513 552
Bioenergy & Other
Degree days, number 2,548 2,820 2,432 2,399 2,526
Heat generation, GWh 6,368 7,907 6,671 8,312 8,768
Power generation, GWh 6,012 6,890 4,438 4,640 6,652
Power sales, GWh 5,399 8,797 11,623 14,700 15,296
Gas sales, GWh 31,637 61,349 90,347 124,951 131,144
ESG statements
Employees (FTE), end of year, number 8,027 6,836 6,179 6,526 6,080
Total recordable injury rate (TRIR) 3.1 3.0 3.6 4.9 4.7
Fatalities, number - - - 1 -
Green share of heat and power generation, % 91 90 90 86 75
GHG emission (scope 1 & 2), Mtonnes 2.5 2.1 1.9 1.9 3.5
GHG intensity (scope 1 & 2), g CO
2
e/kWh 60 58 58 65 131
GHG emissions (scope 3), Mtonnes 11.0 18.2 25.3 34.6 36.2
Ørsted annual report 202248
Management’s review Results | Five-year summary
Fourth quarter
Financial performance – Group
EBITDA
Operating profit (EBITDA) totalled DKK 6.7
billion compared to DKK 8.3 billion in Q4
2021. In Q4 2021, we completed the 50 %
farm-down of Greater Changhua 1 with a
gain of DKK 3.2 billion. Adjusted for new
partnerships, EBITDA increased by DKK 1.6
billion compared to the same period in 2021.
Earnings from offshore sites were DKK 0.2
billion lower than the same period last
year and amounted to DKK 3.7 billion.
‘Wind impact’ was positive with DKK 0.2
billion due to higher wind speeds than
last year.
Impact from ‘Hedges’ was negative with
DKK 0.7 billion in Q4 2022 compared to
Q4 2021 (Q4 2022 was negatively impacted
by DKK 1.7 billion, whereas Q4 2021 was
negatively impacted by DKK 1.0 billion).
This was due to ineffectiveness related to
inflation-indexed contracts with partners
(DKK 0.7 billion) and negative effects
from volume-related overhedging due to
a reduction in the value of intermittency
hedges, only partly offset by lower under-
lying overhedging Q-Q (DKK 0.3 billion).
This was partly offset by a net positive
change in IFRS 9-related ineffective
hedges (DKK 0.3 billion).
Earnings from ‘Sites, other’ increased by
DKK 0.2 billion, mainly due to ramp-up
generation at Hornsea 2 and gains from
value-creating market trading activities,
partly offset by negative effects from high
ROC recycle settlements in Q4 2021 not
repeated in 2022, high prices and volatility
(higher balancing costs), and from expand-
ing our portfolio (higher OPEX, and BSUoS
tariffs).
Earnings from existing partnerships were
DKK 0.1 billion lower than the same period
last year and amounted to DKK -0.8 billion.
Due to further delay with commissioning of
the turbines at Greater Changhua 1, total
costs for the project have increased and
consequently reduced earnings under the
construction agreement.
EBITDA from our Onshore business in-
creased by DKK 0.3 billion to DKK 0.9
billion, driven by ramp-up of generation
and higher achieved prices across the
portfolio.
EBITDA from our CHP plants stayed at
the same level as Q4 2021 and amounted
to DKK 1.7 billion.
Earnings from our gas business were
DKK 2.1 billion, a DKK 1.3 billion increase
compared to the same period last year,
mainly driven by a positive effect from our
EBITDA excluding new partnerships
DKKbn
Q4
2021
Other
5.0
Other,
incl.
DEVEX
0.1
Hedges Temp.
IFRS 9
adj.
0.3
-0.7
-0.3
1
6.6
Other,
incl.
DEVEX
Wind Q4
2022
-0.1
Sites
0.2
Sites,
other
Q4
2022
excl.
temp.
IFRS 9
adj.
0.2
CHP
plants
Existing
partner-
ships
0.4
-0.1
1.2
6.3
0.0
Gas &
other
Bio & OtherOffshore Onshore
Financial performance
DKKm Q4 2022 Q4 2021 %
Revenue 35,679 30,666 16 %
EBITDA 6,696 8,253 (19 %)
New partnerships 77 3,211 (98 %)
EBITDA excl. new partnerships 6,619 5,042 31 %
Impairment loss (2,529) (129) n.a.
Operating profit (loss) (EBIT) 1,375 5,980 (77 %)
Profit (loss) before tax 460 4,361 (89 %)
Ta x (789) (1,103) (28 %)
Tax rate 172 % 25 % 147 %p
Profit (loss) for the period (329) 3,258 n.a.
1 Absolute effect from IFRS 9 hedge effects in Q4 2022
Ørsted annual report 202249
Management’s review Results | Fourth quarter
Cash flows and net debt
DKKm Q4 2022 Q4 2021 %
Cash flows from operating activities 20,915 668 n.a.
EBITDA 6,696 8,253 (19 %)
Reversal of gain (loss) on divestment of assets 57 (2,294) n.a.
Change in derivatives, excl. variation margin (6,543) (3,912) 67 %
Variation margin 8,658 1,850 368 %
Change in provisions (668) 112 n.a.
Other items (98) (209) (53 %)
Interest expenses, net (54) 130 n.a.
Paid tax (28) (26) 8 %
Change in work in progress 1,830 1,322 38 %
Change in tax equity partner liabilities 251 1,018 (75 %)
Change in other working capital 10,814 (5,576) n.a.
Gross investments (9,826) (11,752) (16 %)
Divestments 983 10,952 (91 %)
Free cash flow 12,072 (132) n.a.
Net debt, beginning of period 45,701 21,211 115 %
Free cash flow (12,072) 132 n.a.
Dividends and hybrid coupon paid 228 212 8 %
Addition to lease obligations 582 2,092 (72 %)
Issuance of hybrid capital, net (1,747) - n.a.
Exchange rate adjustments, etc. (2,121) 633 n.a.
Net debt, end of period 30,571 24,280 26 %
gas storage activities and release of a pro-
vision related to the close-down of our B2B
business in the UK. This was partly offset
by lower volumes sold in 2022 and strong
earnings from optimising purchase from our
long-term gas contracts in 2021.
Impairment losses
Impairment losses amounted to DKK 2.5
billion in Q4 2022 and was related to our
Sunrise Wind project in the US. Supply chain
bottlenecks, cost inflation, and higher costs
of capital led to an impairment.
Profit for the period
Profit for the period totalled DKK -0.3 billion,
DKK 3.6 billion lower than Q4 2021. The
decrease was primarily due to the gain from
the 50 % farm-down of Greater Changhua 1
in Q4 2021 and from the impairment loss in
Q4 2022.
Cash flows from operating activities
Cash flows from operating activities totalled
DKK 20.9 billion in Q4 2022 compared to
DKK 0.7 billion in Q4 2021. The increase of
DKK 20.2 billion was mainly due to a release
of collateral tied up at clearing houses.
During Q4 2022, we released DKK 17.4
billion, net, in variation margin payments
on unrealised hedges (part of ‘Change in
derivatives’) and initial margin payments
at clearing houses (part of ‘Change in other
working capital’) due to the sharp decrease
in power and gas prices at the end of the
quarter, whereas we tied up an additional
DKK 2.9 billion in Q4 2021:
– The variation margin payments were a
cash inflow of DKK 8.7 billion vs. a cash
inflow of DKK 1.9 billion in Q4 2021.
– The initial margin payments were a cash
inflow of DKK 8.7 billion in Q4 2022 vs. a
cash outflow of DKK 4.8 billion in Q4 2021.
The positive impact from variation margin
payments included in ‘Change in derivatives’
was partly offset by reversal of unrealised
market trading results and ineffective
hedges.
In Q4 2022, we had tax equity contribution
from Old 300, whereas we received tax
equity contributions from Lincoln Land in
Q4 2021.
In Q4 2022, we had a net cash inflow from
work in progress of DKK 1.8 billion, mainly
due to milestone payments received at
Borkum Riffgrund 3 and construction work
related to Greater Changhua 1. In Q4 2021,
we had a net cash inflow of DKK 1.3 billion,
mainly due to milestone payments at
Greater Changhua 1.
Investments and divestments
Gross investments amounted to DKK 9.8
billion in Q4 2021 and related to the con-
struction of offshore and onshore assets.
Divestments amounted to DKK 1.0 billion
and mainly related to payments from our
25 % partner in Ocean Wind 1.
Ørsted annual report 202250
Management’s review Results | Fourth quarter
Results Q4 2022 Q4 2021 % 2022 2021 %
Business drivers
Decided (FID'ed) and installed capacity, GW 11.1 10.9 1 % 11.1 10.9 1 %
Installed capacity, GW 8.9 7.6 17 % 8.9 7.6 17 %
Generation capacity, GW 4.7 4.0 17 % 4.7 4.0 17 %
Wind speed, m/s 10.7 10.6 1 % 9.5 9.1 4 %
Load factor, % 54 53 1 %p 42 39 3 %p
Availability, % 95 95 0 %p 94 94 (0 %p)
Power generation, GWh 5,411 4,452 22 % 16,483 13,808 19 %
Denmark 634 611 4 % 2,084 1,918 9 %
The United Kingdom 3,631 2,757 32 % 10,989 7,880 39 %
Germany 626 680 (8 %) 1,949 2,022 (4 %)
The Netherlands 401 383 5 % 1,259 1,904 (34 %)
Other
119 21 484 % 202 84 142 %
Power sales, GWh 11,563 8,791 32 % 33,745 25,020 35 %
Power price, LEBA UK 210 261 (20 %) 252 147 71 %
British pound 8.6 8.8 (2 %) 8.7 8.6 1 %
Financial performance, DKKm
Revenue 24,922 19,410 28 % 87,121 50,791 72 %
Sites, O&M, and PPAs 10,767 5,988 80 % 23,349 18,432 27 %
Power sales 13,209 12,388 7 % 52,001 25,905 101 %
Construction agreements
916 905 1 % 11,640 6,044 93 %
Other 30 129 (77 %) 131 410 (68 %)
EBITDA 2,094 5,244 (60 %) 19,569 18,021 9 %
Sites, O&M, and PPAs 3,746 3,983 (6 %) 9,940 13,059 (24 %)
Construction agreements and divestment gains (715) 2,469 n.a. 12,277 7,535 63 %
Other, incl. project development (937) (1,208) (22 %) (2,648) (2,573) 3 %
Depreciation (1,994) (1,519) 31 % (7,006) (5,993) 17 %
Impairment (2,529) (69) 3565 % (2,529) (69) 3,565 %
EBIT (2,429) 3,656 n.a. 10,034 11,959 (16 %)
Cash flow from operating activities 17,728 (1,761) n.a. 5,272 (898) n.a.
Gross investments (7,926) (7,015) 13 % (26,710) (23,416) 14 %
Divestments 1,034 10,910 (91 %) 25,451 21,595 18 %
Free cash flow 10,836 2,134 408 % 4,013 (2,719) n.a.
Capital employed 89,941 85,814 5 % 89,941 85,814 5 %
Offshore
Financial results Q4 2022
Power generation increased by 22 % to
5.4 TWh in Q4 2022. The increase was due
to ramp-up at Hornsea 2 and slightly higher
wind speeds.
Wind speeds amounted to a portfolio
average of 10.7 m/s, which was higher than
in Q4 2021 (10.6 m/s), but below the normal
wind speeds expected in the fourth quarter
(11.0 m/s).
Availability ended at 95 %, in line with the
same period last year.
Revenue increased by 28 % to DKK 24.9 billion.
Revenue from offshore wind farms in
operation increased by 80 % to DKK 10.8
billion, mainly driven by higher generation
and higher PPA revenue following our 50 %
farm-down of Hornsea 2. The Hornsea 2 PPA
will run until CfD start.
Revenue from power sales increased by 7 %
to DKK 13.2 billion due to an increase in power
sales, partly offset by lower power prices.
EBITDA decreased by DKK 3.2 billion and
amounted to DKK 2.1 billion.
EBITDA from ‘Sites, O&M, and PPAs’ amount-
ed to DKK 3.7 billion in Q4 2022. Despite a
positive impact from ramp-up of generation
at Hornsea 2, value-creating market trading
activities, net-positive changes in IFRS
9- related ineffective hedges (DKK 0.3 billion),
and higher wind speeds than last year (DKK
0.2 billion), earnings decreased by DKK 0.2
billion. This was primarily due to ineffective-
ness related to inflation-indexed contracts
with partners (DKK 0.7 billion) and negative
effects from volume-related overhedging
due to a reduction in the value of intermit-
tency hedges, only partly offset by lower un-
derlying overhedging Q-Q (DKK 0.3 billion).
Furthermore, we saw negative effects from
high ROC recycle settlements in Q4 2021 not
repeated in 2022, from generally high prices
and volatility (balancing costs), and from
expanding our portfolio (higher OPEX, BSUoS,
and TNUoS tariffs).
EBITDA from partnerships amounted to
DKK -0.7 billion in Q4 2022 and mainly related
to the construction of Greater Changhua 1.
Due to further delay with commissioning
of the turbines, total costs for the project
have increased and consequently reduced
earnings under the construction agreement.
In Q4 2021, EBITDA from partnerships mostly
related to the 50 % farm-down of Greater
Changhua 1 with a gain of DKK 3.6 billion.
EBITDA from other activities, including project
development, amounted to DKK -0.9 billion,
DKK 0.3 billion less than in Q4 2021, and was
mainly related to lower expensed project
development costs.
Ørsted annual report 202251
Management’s review Results | Fourth quarter
Results Q4 2022 Q4 2021 % 2022 2021 %
Business drivers
Decided (FID'ed) and installed capacity, GW 6.2 4.7 33 % 6.2 4.7 33 %
Installed capacity, GW 4.2 3.4 25 % 4.2 3.4 25 %
Wind speed
1
, m/s 7.7 7.9 (2 %) 7.4 7.4 0 %
Load factor
1
, wind, % 40 47 (7 %p) 40 42 (2 %p)
Load factor
1
, solar PV, % 17 19 (2 %p) 25 24 1 %p
Availability
1
, wind, % 91 96 (5 %p) 93 96 (3 %p)
Availability
1
, solar PV, % 99 99 0 %p 98 96 2 %p
Power generation, GWh 3,425 2,818 22 % 13,146 8,352 57 %
US wind 2,711 2,336 16 % 10,389 6,997 48 %
US solar PV 388 272 42 % 1,920 1,018 89 %
Europe, wind and solar PV 326 210 55 % 837 337 148 %
US dollar 7.3 6.5 12 % 7.1 6.3 13 %
Financial performance, DKKm
Revenue 758 362 109 % 3,014 995 203 %
EBITDA 852 530 61 % 3,644 1,349 170 %
Sites 420 211 99 % 2,097 535 292 %
Production tax credits and tax attributes 712 480 48 % 2,556 1,382 85 %
Other, including project development (280) (161) 74 % (1,009) (568) 78 %
Depreciation & impairment (448) (373) 20 % (1,644) (963) 71 %
EBIT
404 157 157 % 2,000 386 418 %
Cash flow from operating activities 1,039 1,591 (35 %) 2,509 4,467 (44 %)
Gross investments (1,856) (4,606) (60 %) (10,396) (15,525) (33 %)
Divestments 13 - n.a. 56 - n.a.
Free cash flow (804) (3,015) (73 %) (7,831) (11,058) (29 %)
Capital employed 28,463 22,634 26 % 28,463 22,634 26 %
1 For 2021, these business drivers are for US only. Whereas they are for the whole
portfolio from 2022.
Onshore
Financial results Q4 2022
Power generation from our operating
onshore assets increased by 22 % compared
to Q4 2021 and amounted to 3.4 TWh.
The increase was due to the commissioning
of Haystack, Ford Ridge, the wind part
of Helena Energy Center, and ramp-up of
generation at Old 300. In Q4 2022, the wind
speeds across the portfolio were 7.7 m/s,
which were higher than last year (7.5 m/s
for the entire portfolio) and 1 % higher than
a normal wind year.
Availability for wind farms was lower during
the quarter due to minor technical issues,
mainly at Willow Springs.
Revenue was up by DKK 0.3 billion compared
to Q4 2021 and amounted to DKK 0.7 billion.
The increase was mainly due to increased
power generation as a result of the newly
commissioned assets and higher achieved
prices across the portfolio.
In the US, we benefitted from the higher
power prices during the ramp-up phases of
assets under construction, where PPAs do
not start until COD. Furthermore, some of
our PPAs have upside share structures that
allow for capture of additional revenue in
periods of high pricing compared to tradi-
tional PPAs.
EBITDA for Q4 2022 amounted to DKK 0.9
billion, DKK 0.3 billion higher than in the
same period last year. The increase was
due to higher generation and higher prices
across the portfolio. This was partly offset
by higher fixed costs due to the expansion
of the business and project development.
Ørsted annual report 202252
Management’s review Results | Fourth quarter
Results Q4 2022 Q4 2021 % 2022 2021 %
Business drivers
Degree days 861 927 (7 %) 2,548 2,820 (10 %)
Heat generation, GWh 2,064 2,467 (16 %) 6,368 7,907 (19 %)
Power generation, GWh 1,409 2,096 (33 %) 6,012 6,890 (13 %)
Gas sales, GWh 4,048 13,744 (71 %) 31,637 61,349 (48 %)
Power sales, GWh 904 2,072 (56 %) 5,399 8,797 (39 %)
Gas price, TTF, EUR/Mwh 94.4 92.0 3 % 120.5 45.7 164 %
Power price, DK, EUR/Mwh 176.2 147.1 20 % 213.7 87.8 143 %
Green dark spread, DK, EUR/Mwh 23.3 27.0 (14 %) 39.5 4.8 732 %
Wood pellet spread, DK, EUR/Mwh (6.2) 70.8 n.a. 54.4 29.8 82 %
Financial performance, DKKm
Revenue 10,251 13,252 (23 %) 46,243 32,390 43 %
EBITDA 3,609 2,416 49 % 8,619 4,747 82 %
CHP plants 1,718 1,715 0 % 5,851 3,202 83 %
Gas Markets & Infrastructure 2,073 770 169 % 3,117 1,829 70 %
Other, incl. project development (182) (69) 164 % (349) (284) 23 %
Depreciation (287) (243) 18 % (859) (831) 3 %
EBIT 3,322 2,173 53 % 7,760 3,916 98 %
Cash flow from operating activities 738 419 76 % 2,622 7,593 (65 %)
Gross investments (25) (113) (78 %) (267) (274) (3 %)
Divestments (4) 73 n.a. (4) (178) (98 %)
Free cash flow 709 379 87 % 2,351 7,141 (67 %)
Capital employed 5,211 1,950 167 % 5,211 1,950 167 %
Bioenergy & Other
Financial results Q4 2022
Heat generation decreased by 16 % in Q4
2022, mainly due to warmer weather. Power
generation decreased by 33 %, mainly due
to lower CHP generation and less attractive
spreads for condensing power generation.
Gas sales and power sales decreased by
71 % and 56 %, respectively, due to no vol-
umes being delivered under the Gazprom
Export sourcing contract and a gradual
phase-out of our remaining B2B activities
in the UK.
Revenue decreased by 23 % compared to
Q4 2021 and amounted to DKK 10.3 billion.
The decrease was driven by significantly
lower gas and power sales, partly offset
by higher prices.
EBITDA amounted to DKK 3.6 billion
compared to DKK 2.4 billion in Q4 2021.
EBITDA from ‘CHP plants’ was in line with
Q4 2021. The decrease in generation and
lower spreads was offset by a positive
adjustment on ineffective hedges (DKK 0.2
billion).
EBITDA from ‘Gas Markets & Infrastructure’
increased by DKK 1.3 billion relative to the
same period last year, amounting to DKK 2.1
billion in Q4 2022. The increase was mainly
driven by a positive effect from our gas
storage activities and release of a provi-
sion related to the close-down of our B2B
business in the UK. This was partly offset
by lower volumes sold in 2022 and strong
earnings from optimising purchase from our
long-term gas contracts in 2021.
Ørsted annual report 202253
Management’s review Results | Fourth quarter
Quarterly summary, 2021–2022
Financial statements
DKKm
2022 2021
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Income statement
Revenue 35,679 36,541 26,295 33,762 30,666 14,510 13,553 18,944
EBITDA 6,696 12,317 3,615 9,429 8,253 2,984 8,196 4,863
Offshore 2,094 9,652 1,904 5,919 5,244 1,304 7,527 3,946
Sites, O&M, and PPAs 3,746 467 2,031 3,698 3,983 1,822 2,368 4,886
Construction agreements
and divestment gains (715) 9,765 601 2,620 2,469 (9) 5,648 (573)
Other, incl. project development (937) (580) (728) (399) (1,208) (509) (489) (367)
Onshore 852 867 1,075 850 530 413 178 228
Bioenergy & Other 3,609 1,849 647 2,514 2,416 1,206 503 622
Other activities 141 (51) (11) 146 63 61 (12) 67
Depreciation and amortisation (2,792) (2,530) (2,304) (2,128) (2,143) (1,939) (1,959) (1,930)
Impairment (2,529) - - - (129) - - -
Operating profit (loss) 1,375 9,787 1,311 7,301 5,980 1,045 6,237 2,933
Gain (loss) on divestment of enterprises 32 124 67 108 (684) (22) (72) 36
Net financial income and expenses (985) (217) (486) (848) (930) (351) (466) (419)
Profit (loss) before tax 460 9,695 893 6,561 4,361 671 5,698 2,547
Ta x (789) (340) (624) (860) (1,103) (184) (154) (949)
Profit (loss) for the period (329) 9,355 269 5,701 3,258 487 5,544 1,598
Balance sheet
Assets 314,142 359,758 320,722 285,087 270,385 261,892 223,791 210,972
Equity 95,532 53,777 61,276 76,719 85,137 79,150 96,910 96,541
Shareholders in Ørsted A/S 71,743 32,413 40,091 55,704 64,072 58,129 75,842 75,835
Non-controlling interests 3,996 3,380 3,201 3,031 3,081 3,037 3,084 2,722
Hybrid capital 19,793 17,984 17,984 17,984 17,984 17,984 17,984 17,984
Interest-bearing net debt 30,571 45,701 41,449 30,026 24,280 21,211 12,067 13,190
Capital employed 126,103 99,478 102,725 106,745 109,416 100,361 108,977 109,731
Additions to property, plant, and equip-
ment 9,912 9,899 8,724 5,127 17,041 11,477 8,954 6,469
Cash flows
Cash flows from operating activities 20,915 (11,309) 2,355 (37) 668 246 3,147 8,087
Gross investments (9,826) (14,417) (6,372) (6,832) (11,752) (8,757) (12,133) (6,665)
Divestments 983 22,459 267 1,927 10,952 7 10,591 (31)
Free cash flow 12,072 (3,267) (3,750) (4,942) (132) (8,504) 1,605 1,391
Financial ratios
Return on capital employed (ROCE), % LTM 16.8 24.4 14.8 19.0 14.8 12.9 12.5 7.5
FFO/adjusted net debt, % LTM 42.7 35.3 17.6 25.0 26.3 42.5 56.9 51.7
Number of outstanding shares, end of
period, ’000 420,209 420,209 420,209 420,175 420,175 420,175 420,175 420,068
Share price, end of period, DKK 631 608 742 849 835 849 880 1,025
Market capitalisation, end of period,
DKKbn 265 255 312 357 351 357 370 430
Earnings per share (EPS), DKK 1.2 22.3 0.3 13.2 7.5 1.1 12.9 2.8
1 For 2021, these business drivers are for US only. Whereas they are for the whole
portfolio from 2022.
Business drivers
2022 2021
Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Offshore
Decided (FID’ed) and installed capacity, GW 11.1 11.1 11.1 11.1 10.9 9.8 9.8 9.9
Installed capacity, GW 8.9 8.9 7.6 7.6 7.6 7.6 7.6 7.6
Generation capacity, GW 4.7 5.3 4.8 4.2 4.0 4.0 4.0 4.4
Wind speed, m/s 10.7 7.7 8.4 11.3 10.6 7.6 7.8 10.5
Load factor, % 54 28 35 54 53 27 29 50
Availability, % 95 91 94 95 95 93 93 95
Power generation, GWh 5,411 3,246 3,324 4,502 4,452 2,286 2,521 4,549
Power sales, GWh 11,563 5,600 7,416 9,166 8,791 4,803 4,541 6,885
Onshore
Decided (FID’ed) and installed capacity, GW 6.2 5.1 4.9 4.7 4.7 4.7 4.7 4.0
Installed capacity, GW 4.2 4.2 4.0 3.6 3.4 3.0 2.4 1.7
Wind speed
1
, m/s 7.7 6.0 7.8 7.9 7.9 6.4 7.3 7.7
Load factor
1
, wind, % 40 28 47 47 47 33 45 45
Load factor
1
, solar PV, % 17 32 31 21 19 27 29 -
Availability
1
, wind, % 91 92 92 96 96 98 97 93
Availability
1
, solar PV, % 99 96 99 99 99 98 90 -
Power generation, GWh 3,425 2,723 3,795 3,203 2,818 1,904 1,983 1,647
Bioenergy & Other
Degree days, number 861 98 448 1,141 927 81 487 1,325
Heat generation, GWh 2,064 239 823 3,243 2,467 402 1,148 3,890
Power generation, GWh 1,409 1,363 1,102 2,138 2,096 1,028 1,507 2,259
Power sales, GWh 904 1,339 1,466 1,690 2,072 2,271 2,167 2,287
Gas sales, GWh 4,048 5,706 8,891 12,993 13,744 13,580 15,079 18,945
ESG statements
Employees, end of period, number 8,027 7,681 7,292 7,016 6,836 6,672 6,472 6,311
Total recordable injury rate (TRIR) 3.1 3.3 2.8 1.3 3.0 3.0 3.1 3.0
Fatalities, number - - - - - - - -
Green share of heat and power genera-
tion, % 88 89 93 92 93 89 93 87
GHG emissions (scope 1 & 2), Mtonnes 0.8 0.7 0.4 0.6 0.5 0.5 0.4 0.7
GHG intensity (scope 1 & 2), g CO2e/kWh 62 88 49 48 45 91 51 59
GHG emissions (scope 3), Mtonnes 1.5 3.1 2.6 3.7 3.9 4.4 4.6 5.3
Ørsted annual report 202254
Management’s review Results | Quarterly summary, 2021-2022
Governance
56 Message from the Chair
57 Corporate governance
60 Board of Directors
65 Group Executive Team
67 Shareholder information
We rely on ships to install, service, and
operate the offshore wind farms that are
helping de carbonise the world’s energy
systems. But ships themselves are difficult
to decarbonise, since they rely on fossil fuels
and cannot yet be electrified.
That is why we, in partnership with Danish
offshore support supplier ESVAGT, have taken
the important step of investing in the world’s
first service operation vessel that can run on
e-methanol produced by wind energy and
carbon captured from biomass.
Ørsted annual report 202255
Management’s review
We continued strengthening our corporate governance
model for the next step in Ørsted’s growth journey.
In the Board, we firmly believe that corporate governance is
fundamental for Ørsted’s growth journey towards becoming
the world’s leading green energy major. In 2022, the Board
continued to strengthen the corporate governance model,
which is based on three pillars: enabling the right decision-
making, having the right competences in the right places,
and fostering a company culture of inclusiveness and integ-
rity. These pillars are the foundation for our ways of working
across the organisation.
As part of our commitment to continuously improve our
ways of working, the Board completed its evaluation with
the support from an external advisor in 2022. This evaluation
highlighted development areas, which we consolidated into
two primary projects going forward: revisiting our approach
to the split of mandates between the Board and leader-
ship team and strengthening our processes for talent
management and retention.
Strengthening decision-making across our footprint
In 2022, we implemented a new organisational structure with
three regions: the Americas, Europe, and APAC, complemented
by global capabilities. Our aim is to strengthen simpler and
faster decision-making, to secure customer and market
centricity, and to realise synergies between our onshore and
offshore businesses. The Board is confident that this new
structure will assist Ørsted in seizing unprecedented market
opportunities while meeting customer demands for integrated
energy solutions.
We formed a new executive leadership team, the Group
Executive Team (GET), which reflects the new organisational
set-up and consequently includes the Americas, Europe, and
APAC regions, P2X, Legal, and Global Stakeholder Relations.
The Board welcomed new senior executives, who bring varied
skills and experiences to the team.
In early 2023, we will implement new delegated authorities
across the organisation to scale our governance model
for future growth while supporting simpler and faster
decision-making.
Securing the right competences
We want to ensure the right competences to success-
fully drive our business forward. To further improve talent
management and retention, we have introduced a recurring
’People’ update on the agenda for each ordinary meeting,
an annual update on GET member successors with oppor-
tunities for the Board to meet talents, and a process for
better involvement of all Board members in recruitment
to the Board.
We welcomed the four employee-elected Board members,
who won the elections early in 2022 for employees based
in Denmark. The election process had a high level of en-
gagement and a diverse representation of nationalities,
backgrounds, ages, and genders. Following approval at our
annual general meeting in 2022, the 2024 election will be
open to all employees across our footprint. This will further
solidify our global presence and bring perspectives from
all locations where we are present.
Fostering a culture of inclusiveness and integrity
Diversity was among the key criteria when filling the leader-
ship positions of the new Ørsted organisation. This resulted
in a more diverse leadership composition in terms of nation-
ality, ethnicity, background, age, and gender. We recognise
that we need to move our diversity, equity, and inclusion
(DE&I) efforts further and farther, and this will continue to be
a priority area for the Board.
We believe that all Board members should be role models
for integrity. We do so by being open and trustworthy while
upholding high ethical standards. In the Board, we will con-
tinue to promote a good culture, purpose, and sound values
through our meetings and offsite activities.
Efforts for the future
We welcome and follow the recommendations prepared
by the Danish Committee on Corporate Governance.
On the following pages, you can read more about our cor-
porate governance and our continued efforts to strengthen
Ørsted’s governance procedures and culture.
Message from the Chair
Thomas Thune Andersen
Chair
Ørsted annual report 202256
Management’s review Governance | Message from the Chairman
Corporate governance
The Board of Directors appoints the Executive Board,
consisting of the Group President and CEO, the CFO, and
the Chief HR Officer (CHRO), who undertake the day-to-day
management of Ørsted through the Group Executive
Team. None of our executives are members of the Board
of Directors.
Shareholders and general meeting
Ørsted is a publicly listed company with the Danish State
as majority shareholder with a 50.1 % ownership share.
The Danish State exercises its ownership interest in Ørsted
in accordance with the ordinary governance set-up in
Danish companies, where a board of non-executive
directors (the Board of Directors) and executive directors
(the Executive Board) are responsible for the management
of the company. The Danish State exercises its interest at
the general meeting. The Danish State’s ownership policy
is available here (only in Danish): fm.dk/udgivelser/2015/
april/statens-ejerskabspolitik/.
All our shareholders may exercise their rights and vote
at the general meeting through a one-share-one-vote
principle. The general meeting adopts decisions, such as
the election of the Board of Directors and the auditor,
in accordance with the ordinary Danish rules. Due to
our majority ownership by the Danish State, we have a
bespoke quorum requirement, as proposals to amend
our articles of association or dissolve the company require
that the Danish State participates in the general meeting
and supports the proposals.
Board of Directors
Each year at the annual general meeting, the shareholders
elect six to eight board members. In addition, our employ-
ees may elect members corresponding to half of the board
members elected by the general meeting pursuant to
Danish mandatory rules. Employee elections are ordinarily
held every four years, most recently in 2022. As our general
meeting after the employee election in 2022 approved to
expand our scheme for employee-elected board members
to also cover employees outside Denmark, the current
election period is only two years to allow for the first
international election to be held already in 2024. For the
time being, our Board of Directors comprises 12 members,
eight members elected by the general meeting and four
members elected by the employees.
The Board of Directors is responsible for the overall and
strategic management of the company. The Board of
Directors lays down the company’s strategy and makes
decisions concerning major investments and divestments,
the capital base, key policies, control and audit matters,
risk management, and significant operational issues.
The overall and strategic management of the company
is anchored in a board of non-executive directors appointed
by the shareholders.
Our governance model
Shareholders and general meeting
Board of Directors
Nomination
& Remuneration
Commitee
Audit & Risk
Commitee
Group Executive Team
Ørsted annual report 202257
Management’s review Governance | Corporate governance
You can see the most important tasks in 2022 to the right.
The Board of Directors monitors and oversees progress
related to our sustainability and climate change strategy,
including our ambitious net-zero carbon reduction targets
for scope 1-3 emissions. We routinely integrate climate
change considerations when setting our strategic direction,
reviewing sustainability risks, setting performance objectives,
deciding on our capital allocation, and when approving and
overseeing major investments, acquisitions, and divestments.
The Board of Directors has prepared an overview of the com-
petences required on the board. The list of required compe-
tences can be found at orsted.com/competences-overview.
We have a diverse Board of Directors. With three female
board members out of the eight elected by the general
meeting, we have equal representation as defined under
Danish law. The age of our board members spans from 51 to
72 years old among board members elected by the general
meeting and from 28 to 55 years old among board members
elected by the employees.
Our board members have different educational backgrounds
within finance, economics, geophysics, and engineering and
professional experience from the energy or other industries,
private equity, private investments, and academia.
A description of the individual board members, including
their other executive positions, independence, and how the
individual board members contribute to the required com-
petences can be found in the following pages. Their meeting
attendance during 2022 can be found on the next page.
In the first half of 2022, the Board of Directors performed its
annual evaluation of the Board of Directors with the assis-
tance of an external advisor, Leadership Advisor Group.
Important tasks 2022
— managed by the Board of Directors
Investments, acquisitions, and divestments
Build-out of our offshore wind portfolio,
including bids into seabed, project, or trans-
mission auctions and tenders in the US, the UK,
Denmark, and the Netherlands.
Final investment decision on the South Fork
Offshore wind farm.
Signing of an agreement to divest 50 % of the
Hornsea 2 Offshore Wind Farm to AXA IM Alts
and Crédit Agricole Assurances.
Build-out of our onshore portfolio in the US,
including final investment decisions on the
Sunflower Wind, Mockingbird Solar Center, and
Eleven Mile projects.
Acquisition of the onshore wind and solar plat-
form in Germany and France from Ostwind and
the Ford Ridge wind project in the US from Ares.
Divestment of 50 % of a portfolio of four US
onshore wind and solar projects to Energy
Capital Partners.
Acquisition of Public Service Enterprise Group’s
(PSEG) 25 % equity stake in the 1,100 MW off-
shore wind energy project Ocean Wind 1.
Strategic discussions on development of the
P2X business and FID on the Swedish Flag-
shipONE e-methanol project.
Decision to seek to divest our Renescience
business.
Other tasks
Approval of new organisational structure,
including formation of the Group Executive
Team to drive global growth.
Discussion of social responsibility and
biodiversity.
Issuance of green senior bonds to finance global
build-out of renewable energy and green
growth ambition and refinancing of green and
hybrid capital securities.
Approval of new hedging framework for
merchant price exposure
Oversight of our financial results and guidance.
Oversight of the impacts of the Russian invasion
of Ukraine, including the contractual relation-
ship with Gazprom Export.
Oversight of the results from the 2022 employee
satisfaction survey, including the focus areas
identified by the Group Executive Team.
Oversight and discussion of the development
of our consolidated environmental, social,
and governance (ESG) statements.
Ørsted annual report 202258
Management’s review Governance | Corporate governance
The numbers indicate how many meetings in 2022 the members have
attended or not attended, respectively, during the year.
1 Due to illness.
2 Joined the Board of Directors on 8 April 2022.
Member of the board
Board
of Directors
Audit & Risk
Committee
Nomination &
Remuneration
Committee
Ordinary Extraordinary
Thomas Thune Andersen 6/1
1
6/0 6/0
Lene Skole 7/0 6/0 5/1
Lynda Armstrong 7/0 4/2 5/1
Jørgen Kildahl 7/0 6/0 7/1
Julia King 7/0 6/0
Peter Korsholm 7/0 6/0 8/0
Henrik Poulsen 7/0 5/1
Dieter Wemmer 7/0 6/0 8/0
Benny Gøbel 7/0 6/0
Leticia Francisca Torres Mandiola
2
6/0 2/0
Alice Florence Marion Vallienne
2
6/0 2/0
Anne Cathrine Collet Yde
2
6/0 2/0
The evaluation was based on input from board members
and executives. It consisted of in-depth personal inter-
views, a customised online questionnaire, an analysis of
how time is spent during board meetings, board composi-
tion mapping, and board composition benchmarking.
The external advisor also observed a board meeting.
As part of the evaluation, board members and executives
were provided with feedback on their individual perfor-
mance regarding how they add value to the board.
The board evaluation was discussed at a board meeting
in June.
The Board of Directors was evaluated by the external
advisor to be a very well-functioning board. The board
members are highly professional, knowledgeable, and
passionate about the company purpose. They understand
their stewardship role and cooperate with the Executive
Committee (now Group Executive Team) in an engaged
and transparent way. Led by the Chair, the tone is open,
respectful, and very encouraging. Meetings are run in a
structured way, board members feel they can say what
they mean, and the operation of the board meetings and
the committees works well. Going forward, the external
advisor suggested that the board first and foremost
reviews how it spends it time.
While the number of investment projects continue to in-
crease, there will be a delicate balance to strike, ensuring
investments will continue to be appropriately discussed,
while also allocating sufficient time for discussing other
key strategic questions.
Each year, the general meeting approves the remuneration
for the members of the Board of Directors for the coming
year. In the separate remuneration report, you can read
more about the remuneration of the Board of Directors.
Furthermore, we have considered the recommendations
prepared by the Danish Committee on Corporate Govern-
ance. As further described in our corporate governance
report, we comply with all recommendations except
that we, due to lack of shareholder interest in observing
general meetings virtually, do not offer this option to our
shareholders unless special circumstances require it, like
COVID-19 (recommendation 1.2.1).
See link to the remuneration report below. See also links
to the statutory reports on data ethics and corporate gov-
ernance prepared in accordance with the Danish Financial
Statements Act, sections 99 d and 107 b, respectively.
orsted.com/remuneration2022
Meeting attendance
“
Led by the Chair, the tone
is open, respectful, and very
encouraging
Ørsted annual report 202259
Management’s review Governance | Corporate governance
Board of Directors
Lene Skole
*1959, Denmark
Elected by the general meeting
Deputy Chair since 2015
Independent
Joined 2015
Re-elected 2022
Term of office expires 2023
Experience
Highly experienced in managing listed companies from
her previous position as CFO of Coloplast and current
position as CEO of Lundbeckfonden where she serves as
a non-executive director of the portfolio companies of
Lundbeckfonden.
Positions
CEO
Lundbeckfonden and Lundbeckfond Invest A/S.
Chair
LFI Equity A/S.
Deputy Chair
ALK-Abelló A/S, H. Lundbeck A/S, and Falck A/S.
Member
Nordea Bank Abp.
Board committees
Member of the Audit Committee and member of the
Remuneration Committee of Falck A/S, member of the
Nomination & Remuneration Committee and Scientific
Committee of ALK-Abelló A/S, member of the Nomination
& Remuneration Committee and Scientific Committee
of H. Lundbeck A/S, and member of the Audit Committee
of Nordea Bank Abp.
Competences
Management
· General · Financial · Risk · Stakeholder
· Human resources.
Other
· Investor and capital market relationships · ESG
Thomas Thune Andersen
*1955, Denmark
Elected by the general meeting
Chair since 2014
Independent
Joined 2014
Re-elected 2022
Term of office expires 2023
Experience
Extensive international leadership experience from leading
positions in A.P. Moller - Maersk and non-executive director-
ships in listed and privately held companies within the
energy, critical infrastructure, and other sectors.
Positions
Chair
VKR Holding A/S, Lloyds Register Group Limited,
and Lloyds Register Foundation.
Member
BW Group Ltd, IMI plc (Senior Independent Director)
and Green Hydrogen Systems A/S.
Board committees
Remuneration Committee of Lloyds Register Group Limited,
Nomination Committee of Lloyds Register Foundation,
Nomination Committee, Remuneration Committee, and the
Audit Committee of IMI plc, and Nomination Committee of
VKR Holding A/S.
Other
Member of the Danish Committee on Corporate Governance,
Commissioner of the Energy Transition Commission (ETC),
member of the Community of Chairpersons of the World
Economic Forum (WEF), and member of Friends of Ocean
Action of WEF.
Competences
Management
· General · Safety · Risk · Project · Stakeholder
Other
· Energy sector · ESG
Lynda Armstrong
*1950, Great Britain
Elected by the general meeting
Independent
Joined 2015
Re-elected 2022
Term of office expires 2023
Experience
Strong global managerial experience from more than
30 years in leading positions in Shell, including as Vice
President in Shell International, and from non-executive
directorships in international companies and large
organisations.
Positions
Chair
The Engineering Construction Industry Training
Board (ECITB).
Competences
Management
· General · Safety · Risk · Project · Stakeholder
· Human resources.
Other
· Energy sector · ESG
Ørsted annual report 202260
Management’s review Governance | Board of Directors
Peter Korsholm
*1971, Denmark
Elected by the general meeting
Independent
Joined 2017
Re-elected 2022
Term of office expires 2023
Experience
Extensive M&A experience from his time as Partner
and Head of EQT Partners Denmark and from private
investments. Also experience with financial reporting,
risk management, and capital markets from CFO position
at AAK AB.
Positions
CEO
DSVM Invest A/S, DSV Miljø Group A/S, Togu ApS,
and Totalleveranser Sverige AB.
Chair
Flügger Group A/S, Nymølle Stenindustrier A/S,
Totalleveranser Sverige AB, Lion Danmark I ApS,
and two wholly-owned subsidiaries of Lion Danmark
I ApS (Lomax Group).
Member
DSVM Invest A/S and eight wholly-owned subsidiaries
of DSVM Invest A/S, BCHG Holding A/S, and two-wholly
owned subsidiaries of BCHG Holding A/S, and Projekt-
selskabet Teglbuen A/S.
Other
Chair of Investment Committee of Zoscales Partners.
Competences
Management
· General · Financial · Risk · Stakeholder
Other
· Investor and capital market relationships · ESG
Julia King
The Baroness Brown of Cambridge
*1954, Great Britain
Elected by the general meeting
Independent
Joined 2021
Re-elected 2022
Term of office expires 2023
Experience
Strong international background within engineering in
both industry and academia, including Rolls-Royce plc,
Cambridge University, and Imperial College. A deep
knowledge of renewable energy and government policy
perspectives from positions, among others, as member of
the Committee on Climate Change and Non-executive
director of the Green Investment Bank.
Positions
Chair
The Carbon Trust, STEM Learning Ltd.
Non-executive director
Ceres Power Holdings and Frontier IP.
Other
Crossbench Peer in the UK House of Lords, Chair of
the House of Lords Science and Technology Select
Committee, Chair of the Adaptation Committee of the
Committee on Climate Change, and member of the UK
Hydrogen Policy Commission.
Competences
Management
· General · Financial · Project · Stakeholder
Other
· IT, technology, and digitalisation · ESG
Jørgen Kildahl
*1963, Norway
Elected by the general meeting
Independent
Joined 2018
Re-elected 2022
Term of office expires 2023
Experience
Strong international background in renewable energy and
a profound knowledge of how the energy ecosystems work
from positions as Executive Vice President of Statkraft and
member of the Board of Management of E.ON SE.
Positions
Deputy Chair
Telenor ASA.
Member
Scatec ASA and Alpiq AG.
Other
Senior Advisor and member of the Energy Investment
Committee of Energy Infrastructure Partners, Switzerland,
and advisor to the Board of Directors of Abu Dhabi National
Energy Company PJSC (TAQA).
Board committees
Chair of the Sustainability & Compliance Committee and
member of the Audit & Risk Committee of Telenor ASA, the
Audit Committee of Scatec ASA, and the Audit Committee
of Alpiq AG.
Competences
Management
· General · Safety · Risk · Project · Stakeholder
Other
· Energy sector · IT, technology, and digitalisation
· Investor and capital market relationships · ESG
Ørsted annual report 202261
Management’s review Governance | Board of Directors
Benny Gøbel
*1967, Denmark
Elected by the employees
Not independent
Joined 2011
Re-elected 2022
Term of office expires 2024
Experience
Benny Gøbel has worked in Ørsted since 2005.
Positions
Senior Mechanical Specialist, EPCO & IT.
Competences
Other
· Energy sector
Dieter Wemmer
*1957, Switzerland
Elected by the general meeting
Independent
Joined 2018
Re-elected 2022
Term of office expires 2023
Experience
Highly experienced in capital markets, investments, and
risk management from leading positions within the
finance sector, including as CFO of Allianz.
Positions
Chair
Marco Holding, plc and one wholly-owned subsidiary
of Marco Holding, plc.
Member
UBS Group AG and UBS AG.
Board committees
Member of the Audit Committee and Compensation
Committee of USB Group AG and UBS AG.
Competences
Management
· General · Financial · Risk · Stakeholder
Other
· IT, technology, and digitalisation
· Investor and capital market relationships · ESG
Henrik Poulsen
*1967, Denmark
Elected by the general meeting
Not independent
1
Joined 2021
Re-elected 2022
Term of office expires 2023
Experience
Unique company and industry knowledge from his former
role as CEO of Ørsted. Extensive capabilities within strategy
and value creation, transformational change, and finance
from former executive positions in TDC, Capstone/KKR, and
LEGO, and his current portfolio of non-executive directorships.
Positions
Chair
Carlsberg A/S and Carlsberg Breweries A/S, Faerch Group
Holding A/S and Faerch A/S.
Deputy Chair
Novo Nordisk A/S.
Member
Bertelsmann SE & Co. KgaA and Novo Holdings A/S.
Other
Senior Advisor: A.P. Møller Holding A/S.
Competences
Management
· General · Safety · Financial · Risk · Project · Stakeholder
Other
· Energy sector · Investor and capital market relationships
· ESG.
1 Henrik Poulsen is not independent as he is the former CEO
of Ørsted, cf. recommendation 3.2.1 of the Danish corporate
governance recommendations.
Ørsted annual report 202262
Management’s review Governance | Board of Directors
Anne Cathrine Collet Yde
*1983, Denmark
Elected by the employees
Not independent
Joined 2022
Term of office expires 2024
Experience
Anne Cathrine Collet Yde has worked in Ørsted since 2017.
Positions
Lead HR Business Partner, People & Development.
Competences
Management
· Project · Stakeholder · Human resources
Alice Florence Marion Vallienne
*1994, France
Elected by the employees
Not independent
Joined 2022
Term of office expires 2024
Experience
Alice Florence Marion Vallienne has worked in Ørsted
since 2018.
Positions
Head of Ventures & Open innovation portfolio, EPCO & IT.
Competences
Management
· Financial · Risk · Project
Other
· Energy sector · IT, technology, and digitalisation
Leticia Francisca Torres Mandiola
*1994, Chile
Elected by the employees
Not independent
Joined 2022
Term of office expires 2024
Experience
Leticia Francisca Torres Mandiola has worked
in Ørsted since 2018.
Positions
Senior Business Developer, P2X.
Competences
Other
· Energy sector · IT, technology, and digitalisation
Ørsted annual report 202263
Management’s review Governance | Board of Directors
Board committees
The Board of Directors has appointed two committees
from among its members: an Audit & Risk Committee and
a Nomination & Remuneration Committee, which assist the
Board of Directors within selected areas.
Audit & Risk Committee
Dieter Wemmer (Chair), Jørgen Kildahl, and Peter Korsholm
are the members of the Audit & Risk Committee.
The committee assists the Board of Directors in overseeing
the financial and ESG reporting process (including key
accounting estimates and judgements), liquidity and capital
structure development, financial and business-related risks,
compliance with statutory and other requirements from
public authorities, internal controls, IT security in operational
and administrative areas as well as cybersecurity.
Moreover, the committee approves the framework governing
the work of the company’s external and internal auditors
(including limits for non-audit services), evaluates the exter-
nal auditors’ independence and qualifications, and monitors
the company’s whistle-blower scheme.
In 2022, the committee reviewed the continued material
impact from the volatile energy prices on the risk manage-
ment procedures and the financial statement, the current
and future hedging framework, the financial impact of the
acquisition of Ostwind, impairment on our property, plant
and equipment, as well as the continued implementation
of the EU taxonomy reporting framework. Furthermore, the
committee continued to assess the claim made by the Danish
Tax Agency requiring further Danish taxation of certain of
our British offshore wind farms, and lastly, it reviewed the
progress in IT security.
Our Internal Audit function reports to the Audit & Risk Com-
mittee and is independent of our administrative manage-
ment structures. Internal Audit enhances and protects the
organisational value by providing risk-based and objective
assurance, advice, and insight. The focus for Internal Audit is
to audit and advise on our core processes, governance, risk
management, control processes, and IT security.
The Chair of the Audit & Risk Committee is responsible for
managing our whistle-blower scheme. Internal Audit receives
and handles any reports submitted. Our employees and
other associates may report serious offences, such as cases
of bribery, fraud, and other inappropriate or illegal conduct,
to our whistle-blower scheme or through our management
system. In 2022, eight substantiated cases of inappropriate
or unlawful behaviour were reported through our whistle-
blower scheme. Six cases related to Good business conduct
policy violations, while one case concerned IT security, and
one case concerned the workplace environment. None of
the reported cases were critical to our business, nor caused
adjustments to our financial results. One case required a
police report.
Whistle-blower cases are taken very seriously, and we
continuously enhance the awareness of good business
conduct through education and awareness campaigns
to minimise future similar cases.
You can read more about the Audit & Risk Committee and
the terms of reference for the committee at orsted.com/
audit-risk-committee.
Nomination & Remuneration Committee
Thomas Thune Andersen (Chair), Lene Skole, and Lynda
Armstrong are the members of the Nomination & Remunera-
tion Committee.
The committee assists the Board of Directors in matters
regarding the composition, remuneration, and performance
of the Board of Directors and the Group Executive Team.
In 2022, the committee reviewed the remuneration policy
for the Board of Directors and the Executive Board and pro-
posed certain updates to the policy, which were approved
at our annual general meeting in April 2022. The updates
of the remuneration policy include an amendment of the
short-term incentive scheme (STI) for the Executive Board by
increasing the weight of shared KPIs, including an explicit link
to our sustainability ambitions, an extension of the share-
holding build-up period in respect of our share-based long-
term incentive scheme from three to five years, and a board
authorisation to temporarily deviate from the remuneration
policy by offering a compensation to new external execu-
tives for any former incentive-based remuneration forfeited
upon joining Ørsted.
The committee also discussed the appointments of Daniel
Lerup as new CFO, of CHRO Henriette Fenger Ellekrog as
new member of the Executive Board, and of a new ‘Group
Executive Team’ replacing the previous ‘Executive Committee’.
You can read more about the Nomination & Remuneration
Committee and the terms of reference for the committee at
orsted.com/nomination-remuneration-committee.
Ørsted annual report 202264
Management’s review Governance | Board of Directors
Group Executive Team
The 11 members of the Group Executive Team
undertake the day-to-day management.
Mads Nipper (Group President and CEO), Daniel Lerup (CFO),
and Henriette Fenger Ellekrog (CHRO) constitute the members
of the Executive Board of Ørsted A/S.
The Group Executive Team comprises Rasmus Errboe (CEO of
Region Europe), David Hardy (CEO of Region Americas), Per
Mejnert Kristensen (President of Region APAC), Neil O´Donovan
(Head of Strategy, Portfolio & Partnerships), Olivia Breese
(Head of P2X), Richard Hunter (COO), Anders Zoëga Hansen
(Head of Legal), and Ingrid Reumert (Head of Global Stake-
holder Relations).
The Board of Directors has laid down guidelines for the work of the
Executive Board, including the division of work between the Board
of Directors and the Executive Board, and the Executive Board’s
powers to enter into agreements on behalf of the company.
The Board of Directors regularly discusses the Group President
and CEO’s performance, for example by following up on devel-
opments seen in relation to our strategy and objectives.
The Chair of the Board of Directors and the Group President and
CEO also regularly discuss the cooperation between the Board
of Directors and the Executive Board.
We describe the remuneration of the Executive Board in the
separate remuneration report. You can also find information
about the members of the Executive Board on the next page.
Standing from left to right:
Rasmus Errboe
CEO of Region Europe
Daniel Lerup
CFO, Executive Board
Mads Nipper
Group President and
CEO, Executive Board
Richard Hunter
COO
Olivia Breese
Head of P2X
David Hardy
CEO of Region Americas
Per Mejnert Kristensen
President of Region APAC
Seated from left to right:
Henriette Fenger
Ellekrog
CHRO, Executive Board
Anders Zoëga Hansen
Head of Legal
Ingrid Reumert
Head of Global
Stakeholder Relations
Neil O’Donovan
Head of Strategy,
Portfolio & Partnerships
Ørsted annual report 202265
Management’s review Governance | Group Executive Team
Daniel Lerup
*1983, Denmark
Registered as
Chief Financial Officer (CFO)
since April 2022.
Education
MSc in Finance & Accounting,
Copenhagen Business School 2009.
Career
Ørsted A/S
2009 –
Ørsted A/S (and formerly DONG Energy A/S): CFO (2022-),
Head of Commercial and EPC & Operations Finance
(2021-2022), Senior Vice President, CFO Offshore
(2019-2021), Senior Vice President, Investor Relations,
Financial Planning & Tax (2018-2019), Vice President,
Financial Planning & Tax (2016-2018), Head of Group
Financial Analysis (2014-2016), various positions within
the Finance function (2009-2014).
Other positions
CEO: Tukan ApS, Shcarole Invest ApS,
and December 20 ApS.
Chair of the Board of Directors of Koncenton Metropol
A/S and two wholly-owned subsidiaries of Koncenton
Metropol A/S.
Member of the Board of Directors: Koncenton
Søborg Hovedgade A/S, Projekt Svendborg III ApS,
Tyrsted Holding P/S, and one wholly-owned subsidiary
of Tyrsted Holding P/S.
Mads Nipper
*1966, Denmark
Registered as CEO. Group President
and Chief Executive Officer (CEO)
since January 2021.
Education
MSc in International Business,
University of Aarhus 1991
Career
Ørsted A/S
2021 —
Group President and Chief Executive Officer.
Grundfos A/S
2014 — 2020
Group President and Chief Executive Officer.
Lego A/S
1991 – 2014
EVP, Chief Marketing Officer (2011 – 2014)
EVP, Markets & Products (2006 – 2011)
SVP, Global Innovation & Marketing (2004 – 2006)
Managing Director & SVP, Lego Central Europe (2001 – 2004)
SVP, Global Segment 8+ (1999 – 2001)
Various managerial positions (1992 – 1999)
Other positions
Deputy Chair of the Board of Directors of FLSmidth & Co.
A/S and one wholly-owned subsidiary hereof.
Henriette Fenger Ellekrog
*1966, Denmark
Registered as
Chief HR Officer (CHRO)
since November 2022.
Education
MA, (Cand.ling.merc)
Copenhagen Business School 1992.
Career
Ørsted A/S
2019 –
Chief HR Officer (CHRO)
Danske Bank A/S
2014 – 2019
Most recently as Chief HR Officer.
SAS AB
2007 – 2014
Most recently as Deputy CEO, EVP, HR & Communication.
TDC A/S
1998 – 2007
Most recently as Senior Executive Vice President,
Chief of Staff, Member of Executive Management Team.
Peptech (Europe) A/S and Mercuri Urval A/S
1992– 1998
Various positions.
Other positions
Member of the Board and of the Nomination
& Remuneration Committee: NV Bekaert SA.
Member of the Board: Specialisterne Foundation.
Member of the ‘Women on Board’ advisory board
in the Confederation of Danish Industry (DI).
Ørsted annual report 202266
Management’s review Governance | Group Executive Team
Shareholder
information
Over the past five years, the Ørsted share has generated a total
return from share price appreciation and dividends of 107 %.
Price development for the Ørsted share in 2022
The Ørsted share yielded a total loss of 23 % in 2022,
a decrease in the share price of 24 %, and dividends of
DKK 12.5 per share. The share price of comparable European
utility companies decreased by 11 % (7 % total loss), and the
OMX C25 cap decreased by 13 % (11 % total loss) in 2022.
Over the past five years, the Ørsted share has generated a
total return from share price appreciation and dividends of
107 %, an increase in the share price of 91 %, and dividends of
DKK 53.82 per share.
The highest traded share price of the year was DKK 898 on
8 March, while the year’s lowest traded price of DKK 575 was
on 21 October. The Ørsted share closed 2022 at DKK 631,
corresponding to a market value of DKK 272 billion at the
end of the year.
The average daily turnover on Nasdaq Copenhagen was
496,899 shares in 2022. The trading volume decreased by
10 % compared to 2021.
Share capital
Ørsted’s share capital is divided into 420 million shares,
enjoying the same voting and dividend rights. The company’s
share capital remained unchanged in 2022. At the end of
2022, the company held a total of 154 thousand treasury
shares, which will be used to cover incentive schemes.
Share data 2022 2021 2020 2019 2018
Earnings per shares, DKK 34.6 24.3 38.8 12.7 45.3
Proposed dividend per share, DKK 13.5 12.5 11.5 10.5 9.8
Dividend yield, % 2.1 1.5 0.9 1.5 2.2
Share price, year-end, DKK 631 835 1,244 689 436
Share price, high, DKK 898 1,400 1,273 691 474
Share price, low, DKK 575 790 574 428 332
Market capitalisation, year-end, DKKm 272 351 523 290 183
Average trading per day, thousands of shares 496,899 549,778 516,919 447,567 447,103
Share price development 2022
Ørsted share price compared to peers (indexed)
Turnover, Ørsted Ørsted MSCI EU Utilities OMXC25
1,000
Share price
2,500,000
Volumes
1,000,000
900 2,000,000
700
500,000
800 1,500,000
600
0500
Jan. Aug.Mar. Oct.Jun. Dec.Feb. Sep.Apr. Nov.Jul.May
Ørsted annual report 202267
Management’s review Governance | Shareholder information
2 Feb. Ørsted appoints next Group CFO
11 Feb. Ørsted and Eversource joint venture
approves final investment decision on New
York’s South Fork Wind Offshore Wind Farm
28 Apr. Ørsted takes final investment decision on
201 MW onshore wind project Sunflower
Wind in Kansas, US
7 July Ørsted awarded contract for world’s single
biggest offshore wind farm
19 Sep. Ørsted completes acquisition of German
and French onshore wind platform Ostwind
29 Sep. Ørsted completes divestment of 50 % of
Hornsea 2 Offshore Wind Farm
4 Oct. Ørsted to implement new organisational
structure and changes to executive
management to drive global growth
21 Oct. Ørsted partners with ECP in the company’s
first-ever farm-down of onshore assets
16 Dec. Green fuels for Denmark receives Danish
IPCEI funding
20 Dec. Ørsted assumes full ownership and takes
final investment decision on FlagshipONE,
the largest green e-methanol project in
Europe
Selected company
announcements in 2022
1 Feb. Annual report 2022
7 Mar. Annual general meeting
Interim reports:
3 May The first quarter of 2023
10 Aug. The first half-year of 2023
1 Nov. The first nine months of 2023
Financial calendar
2023
Shareholders at 31 December 2022
Share capital and/or voting share %
Denmark 61 %
Danish State (majority shareholder) 50.1 %
Retail investors 2 %
Andel A.M.B.A 5 %
Danish institutional investors 4 %
Share information
ISIN DK 0060094928220
Share classes 1
Nominal value DKK 10 per share
Exchange Nasdaq OMX Copenhagen
Ticker ORSTED
Registered share 97.7 %
Number of shares 420,381,080 shares
Number of treasury shares 154,344 shares
Composition of shareholders
At the end of the year, the number of shareholders had
increased by 6 % to 117,818, and the majority (61 %) lies
with Danish owners. The figure to the right shows the
composition of our shareholders by country, specifying
the two shareholders each holding more than 5 % of the
share capital. Approx. 2 % of the share capital is owned by
Danish retail investors.
Annual general meeting and dividends
The annual general meeting will be held on 7 March
2023. Dividends for the year are expected to amount to
DKK 13.5 per share, corresponding to DKK 5.7 billion and
a yield of 2.1 % compared to the share price of DKK 631 at
the end of 2022. In 2022, dividends of DKK 12.5 per share
were paid for the 2021 financial year.
Investor relations
To achieve a fair pricing of our shares and corporate
bonds, we seek to ensure a high level of transparency
and stability in our financial communication. In addition,
our management and our Investor Relations function
engage in regular dialogues with investors and analysts.
The dialogues take the form of quarterly conference
calls, roadshows, conferences, capital markets days, and
regular meetings with individual or groups of investors and
analysts. The dialogues are subject to certain restrictions
prior to the publication of our financial reporting. In 2022,
we had over 600 meetings with the financial market,
participated in 40 investor events, and had 55 travel days.
Ørsted is covered by 30 equity analysts and 11 bond an-
alysts. Their recommendations and consensus estimates
for Ørsted’s future financial performance are available
at orsted.com/en/investors. On this site, you can also
download our financial reports, our remuneration report,
our ESG performance report, our sustainability report, our
investor presentations, and a wide range of other data.
United Kingdom 10 %
North America 10 %
Others 19 %
Ørsted annual report 202268
Management’s review Governance | Shareholder information
Consolidated financial
statements 2022
1 January – 31 December
We are establishing an onshore business in Spain
– one of Europe’s largest renewables markets –
by entering into four partnerships with Glide Energy,
Rolwind, ARBA Energías Renovables, and Ereda,
who will support project development and services.
Spain is an absolute front runner in the green
energy transition and an attractive market for us.
The Spanish government has set out to reach 70 %
renewable generation by 2030 followed by 100 %
renewable generation by 2050.
69
Financial statements
Ørsted annual report 2022
1. Basis of reporting
1.1 Significant changes and events . . . . . . . . . . . . . . . 77
1.2 Basis of preparation . . . . . . . . . . . . . . . . . . . . . . . 78
2. Return on capital employed
2.1 Segment information . . . . . . . . . . . . . . . . . . . . . . 82
2.2 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
2.3 Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
2.4 Government grants . . . . . . . . . . . . . . . . . . . . . . . 88
2.5 Research and development expenditures . . . . . . . . . 88
2.6 Other operating income and expenses . . . . . . . . . . 89
2.7 Employee costs . . . . . . . . . . . . . . . . . . . . . . . . . 90
2.8 Share-based payment . . . . . . . . . . . . . . . . . . . . . 91
3. Capital employed
3.1 Acquisition of enterprises . . . . . . . . . . . . . . . . . . . 94
3.2 Divestment of enterprises . . . . . . . . . . . . . . . . . . . 96
3.3 Intangible assets, and property, plant, and equipment . 97
3.4 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
3.5 Contract assets and liabilities . . . . . . . . . . . . . . . 103
3.6 Trade receivables . . . . . . . . . . . . . . . . . . . . . . . 104
3.7 Other receivables and other payables . . . . . . . . . . 104
3.8 Tax equity liabilities . . . . . . . . . . . . . . . . . . . . . . 105
3.9 Provisions and contingent liabilities . . . . . . . . . . . 106
3.10 Non-controlling interests . . . . . . . . . . . . . . . . . . 108
4. Tax
4.1 Approach to taxes . . . . . . . . . . . . . . . . . . . . . . . 110
4.2 Tax on profit (loss) for the year . . . . . . . . . . . . . . . 112
4.3 Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
4.4 Our tax footprint . . . . . . . . . . . . . . . . . . . . . . . . 117
5. Capital structure
5.1 Interest-bearing debt and FFO . . . . . . . . . . . . . . . 123
5.2 Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
5.3 Hybrid capital . . . . . . . . . . . . . . . . . . . . . . . . . 128
5.4 Liquidity reserve . . . . . . . . . . . . . . . . . . . . . . . . 129
5.5 Maturity analysis of financial liabilities . . . . . . . . . 131
5.6 Financial income and expenses . . . . . . . . . . . . . . 132
6. Risk management
6.1 Market risk policy . . . . . . . . . . . . . . . . . . . . . . . 134
6.2 Currency risks . . . . . . . . . . . . . . . . . . . . . . . . . . 135
6.3 Energy and commodity price risks . . . . . . . . . . . . 139
6.4 Inflation and interest rate risks . . . . . . . . . . . . . . . 142
6.5 Credit risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
6.6 Fair value measurement . . . . . . . . . . . . . . . . . . . 145
6.7 Energy trading portfolio . . . . . . . . . . . . . . . . . . . 147
6.8 Categories of financial instruments . . . . . . . . . . . . 148
6.9 Sensitivity analysis of financial instruments . . . . . . 149
7. Other notes
7.1 Related-party transactions . . . . . . . . . . . . . . . . . 150
7.2 Auditor’s fees . . . . . . . . . . . . . . . . . . . . . . . . . . 151
7.3 Alternative performance measures . . . . . . . . . . . . 152
7.4 Company overview . . . . . . . . . . . . . . . . . . . . . . 153
7.5 Events after the reporting period . . . . . . . . . . . . . 154
Consolidated statement of income . . . . . . . . . . . . . . . . . 71
Consolidated statement of comprehensive income . . . . . . . 72
Consolidated balance sheet . . . . . . . . . . . . . . . . . . . . . . 73
Consolidated statement of shareholders’ equity . . . . . . . . . 74
Consolidated statement of cash flows . . . . . . . . . . . . . . . 75
Contents
Consolidated financial statements Notes
70
Financial statements
Ørsted annual report 2022
Consolidated statement of income
1 January – 31 December
Note DKKm 2022 2021
2.2, 2.4 Revenue 132,277 77,673
2.3 Cost of sales (97,163 ) (53,110 )
Other external expenses (7,049 ) (5,760 )
2.7, 2.8 Employee costs (5,278 ) (4,289 )
Share of profit (loss) in associates and joint ventures 114 (17 )
2.6 Other operating income 14,119 10,185
2.6 Other operating expenses (4,963 ) (386 )
Operating profit (loss) before depreciation, amortisation, and impairment losses (EBITDA) 32,057 24,296
3.3 Amortisation, depreciation, and impairment losses on intangible assets, and property, plant, and equipment (12,283 ) (8,101 )
Operating profit (loss) (EBIT) 19,774 16,195
3.2 Gain (loss) on divestment of enterprises 331 (742 )
Share of profit (loss) in associates and joint ventures 40 (10 )
5.6 Financial income 15,514 4,380
5.6 Financial expenses (18,050 ) (6,546 )
Profit (loss) before tax 17,609 13,277
4.2 Tax on profit (loss) for the year (2,613 ) (2,390 )
Profit (loss) for the year 14,996 10,887
Profit (loss) for the year is attributable to:
Shareholders in Ørsted A/S 14,549 10,222
Interests and costs, hybrid capital owners of Ørsted A/S 577 740
Non-controlling interests (130 ) (75 )
5.2
5.2
5.2
Earnings per share (DKK)
Diluted earnings per share (DKK)
Proposed dividend per share (DKK)
71
Financial statements
Ørsted annual report 2022
Consolidated financial statements | Consolidated statement of income
Consolidated statement of comprehensive income
1 January – 31 December
Note DKKm 2022 2021
Profit (loss) for the year 14,996 10,887
Other comprehensive income:
Cash flow hedging:
6 Value adjustments for the year (23,521 ) (39,704 )
5.2 Value adjustments transferred to income statement 24,395 7,530
5.2 Value adjustments transferred to balance sheet (116 ) (121 )
Exchange rate adjustments:
Exchange rate adjustments relating to net investment in foreign enterprises (3,747 ) 6,717
6.2 Value adjustment of net investment hedges 738 (3,359 )
5.2 Value adjustments and hedges transferred to income statement 676 (145 )
Tax:
Tax on hedging instruments (902 ) 6,713
Tax on exchange rate adjustments 666 (265 )
Other:
Share of other comprehensive income from associated companies, after tax 26 15
Other comprehensive income (1,785 ) (22,619 )
Total comprehensive income 13,211 (11,732 )
Comprehensive income for the year is attributable to:
Shareholders in Ørsted A/S 12,886 (12,585 )
Interest payments and costs, hybrid capital owners of Ørsted A/S 577 740
Non-controlling interests (252 ) 113
Total comprehensive income 13,211 (11,732 )
Statement of comprehensive income
All items in ‘Other comprehensive income’ may
be recycled to the income statement.
Cash flow hedging
Value adjustments for the year for cash flow
hedging amounting to DKK -23,521 million
mainly consist of losses related to the hedging
of power and, to a lesser extent, losses related
to the hedging of gas and the inflation in the UK.
The loss of DKK 24,395 million transferred to
the income statement mainly consists of losses
related to the hedging of power.
Exchange rate adjustments
In 2022, foreign exchange losses relating to net
investment in foreign enterprises amounting to
DKK 3,747 million were primarily attributable
to a decrease of 5 % in the GBP exchange rate
and a decrease of 4 % in the NTD exchange rate,
partly countered by an increase of 7 % in the USD
exchange rate. A part of the net investment was
hedged.
72
Financial statements
Ørsted annual report 2022
Consolidated financial statements | Consolidated statement of comprehensive income
Consolidated balance sheet
31 December
Note
Assets
DKKm 2022 2021
3.3 Intangible assets 4,029 1,543
3.3 Land and buildings 7,980 8,066
3.3 Production assets 119,211 95,618
3.3 Fixtures and fittings, tools, and equipment 1,543 604
3.3 Property, plant, and equipment under construction 48,931 57,108
Property, plant, and equipment 177,665 161,396
Investments in associates and joint ventures 772 572
Other securities and equity investments 182 221
6 Derivatives 1,804 2,716
4.3 Deferred tax 13,719 13,281
3.7 Other receivables 3,243 2,492
Other non-current assets 19,720 19,282
Non-current assets 201,414 182,221
3.4 Inventories 14,103 15,998
6 Derivatives 23,433 14,078
3.5 Contract assets 408 2
3.6 Trade receivables 12,701 9,565
3.7 Other receivables 20,289 16,134
Income tax 419 1,200
5.4 Securities 25,197 21,228
5.4 Cash 16,178 8,624
Current assets 112,728 86,829
Assets classified as held for sale - 1,335
Assets 314,142 270,385
Assets and related liabilities held for sale
Note
Equity and liabilities
DKKm 2022 2021
5.2 Share capital 4,204 4,204
5.2 Reserves (26,467 ) (24,778 )
Retained earnings 88,331 79,391
5.2 Proposed dividends 5,675 5,255
5.2 Equity attributable to shareholders in Ørsted A/S 71,743 64,072
5.3 Hybrid capital 19,793 17,984
3.10 Non-controlling interests 3,996 3,081
Equity 95,532 85,137
4.3 Deferred tax 7,414 5,616
3.9 Provisions 19,121 15,124
5.5 Lease liabilities 7,697 6,812
5.1 Bond and bank debt 60,451 31,502
6 Derivatives 24,121 17,464
3.5 Contract liabilities 3,085 3,230
3.8 Tax equity liabilities 14,490 13,358
3.7 Other payables 7,363 4,682
Non-current liabilities 143,742 97,788
3.9 Provisions 585 764
5.5 Lease liabilities 569 720
5.1 Bond and bank debt 2,830 19,493
6 Derivatives 33,438 32,325
3.5 Contract liabilities 2,269 2,440
Trade payables 20,641 20,231
3.8 Tax equity liabilities 1,903 1,206
3.7 Other payables 7,518 4,768
Income tax 5,115 5,021
Current liabilities 74,868 86,968
Liabilities 218,610 184,756
Liabilities relating to assets classified as held for sale - 492
Equity and liabilities 314,142 270,385
73
Financial statements
Ørsted annual report 2022
Consolidated financial statements | Consolidated balance sheet
DKKm
2022 2021
Share
capital Reserves
1
Retained
earnings
Proposed
dividends
Share-
holders in
Ørsted A/S
Hybrid
capital
Non-con-
trolling
interests
Total
Group
Share
capital Reserves
1
Retained
earnings
Proposed
dividends
Share-
holders in
Ørsted A/S
Hybrid
capital
Non-con-
trolling
interests
Total
Group
Equity at 1 January 4,204 (24,778 ) 79,391 5,255 64,072 17,984 3,081 85,137 4,204 (1,956 ) 74,294 4,834 81,376 13,232 2,721 97,329
Comprehensive income for the year:
Profit (loss) for the year - - 14,549 - 14,549 577 (130 ) 14,996 - - 10,222 - 10,222 740 (75 ) 10,887
Other comprehensive income:
Cash flow hedging - 758 - - 758 - - 758 - (32,295 ) - - (32,295 ) - - (32,295 )
Exchange rate adjustments - (2,211 ) - - (2,211 ) - (122 ) (2,333 ) - 3,025 - - 3,025 - 188 3,213
Tax on other comprehensive income - (236 ) - - (236 ) - - (236 ) - 6,448 - - 6,448 - - 6,448
Share of other comprehensive
income of associated companies,
after tax - - 26 - 26 - - 26 - - 15 - 15 - - 15
Total comprehensive income - (1,689 ) 14,575 - 12,886 577 (252 ) 13,211 - (22,822 ) 10,237 - (12,585 ) 740 113 (11,732 )
Coupon payments, hybrid capital - - - - - (529 ) - (529 ) - - - - - (430 ) - (430 )
Tax, hybrid capital - - - - - 13 - 13 - - - - - 86 - 86
Additions, hybrid capital - - - - - 3,693 - 3,693 - - - - - 7,327 - 7,327
Disposals, hybrid capital - - - - - (1,945 ) - (1,945 ) - - - - - (2,971 ) - (2,971 )
Proposed dividends - - (5,675 ) 5,675 - - - - - - (5,255 ) 5,255 - - - -
Dividends paid - - 3 (5,255 ) (5,252 ) - (294 ) (5,546 ) - - 4 (4,834 ) (4,830 ) - (349 ) (5,179 )
Additions, non-controlling interests - - - - - - 1,461 1,461 - - 83 - 83 - 596 679
Other changes - - 37 - 37 - - 37 - - 28 - 28 - - 28
Equity at 31 December 4,204 (26,467 ) 88,331 5,675 71,743 19,793 3,996 95,532 4,204 (24,778 ) 79,391 5,255 64,072 17,984 3,081 85,137
1 See note 5.2 ‘Equity’ for more information about reserves.
Consolidated statement of shareholders’ equity
1 January – 31 December
74
Financial statements
Ørsted annual report 2022
Consolidated financial statements | Consolidated statement of shareholders’ equity 2022
Consolidated statement of cash flows
1 January – 31 December
Note DKKm 2022 2021
Operating profit (loss) before depreciation, amortisation, and impairment losses (EBITDA) 32,057 24,296
Reversal of gain (loss) on divestment of assets (10,885 ) (7,920 )
Change in derivatives (8,687 ) (2,051 )
Change in provisions (1,935 ) (158 )
Other items (278 ) (262 )
Change in inventories 1,419 (555 )
Change in contract assets and liabilities (1,303 ) 1,490
Change in trade receivables (2,875 ) (2,299 )
Change in other receivables 2,742 (8,486 )
Change in trade payables 3,886 5,140
Change in tax equity liabilities (353 ) 3,678
Change in other payables (38 ) 1,122
Interest received and similar items 7,985 3,518
Interest paid and similar items (8,548 ) (3,985 )
4.4 Income tax paid (1,263 ) (1,380 )
Cash flows from operating activities 11,924 12,148
Purchase of intangible assets, and property, plant, and equipment (33,004 ) (34,569 )
Sale of intangible assets, and property, plant, and equipment 24,052 20,946
3.1 Acquisition of enterprises (3,406 ) (2,431 )
3.2 Divestment of enterprises 99 (147 )
Purchase of other equity investments 16 (9 )
Purchase of securities (9,414 ) (8,098 )
Sale/maturation of securities 3,780 11,656
Change in other non-current assets (4 ) 53
Transactions with associates and joint ventures (54 ) (21 )
Dividends received and capital reductions 23 29
Cash flows from investing activities (17,912 ) (12,591 )
Supplementary statements
75
Financial statements
Ørsted annual report 2022
Consolidated financial statements | Consolidated statement of cash flows
Consolidated statement of cash flows – continued
1 January – 31 December
Note DKKm 2022 2021
Proceeds from raising loans 37,090 14,582
Instalments on loans (22,595 ) (4,435 )
Instalments on leases (582 ) (520 )
Coupon payments on hybrid capital (529 ) (430 )
Repurchase of hybrid capital (1,945 ) (2,971 )
Proceeds from issuance of hybrid capital 3,693 7,327
Dividends paid to shareholders in Ørsted A/S (5,252 ) (4,830 )
3.10 Transactions with non-controlling interests 1,170 332
Net proceeds from tax equity partners (523 ) 289
Collateral posted in relation to trading of derivatives (48,885 ) (23,034 )
Collateral released in relation to trading of derivatives 52,143 17,082
Cash flows from financing activities 13,785 3,392
Total net change in cash and cash equivalents 7,797 2,949
5.4 Cash and cash equivalents at 1 January 8,614 5,210
Total net change in cash and cash equivalents 7,797 2,949
Exchange rate adjustments of cash and cash equivalents (236 ) 455
5.4 Cash and cash equivalents at 31 December 16,175 8,614
76
Financial statements
Ørsted annual report 2022
Consolidated financial statements | Consolidated statement of cash flows
Financial statements
Ørsted annual report 2022
Notes | 1. Basis of reporting
78
Financial statements
Ørsted annual report 2022
Notes | 1.2 Basis of preparation
79
Financial statements
Ørsted annual report 2022
Notes | 1.2 Basis of preparation
80
Financial statements
Ørsted annual report 2022
Notes | 1.2 Basis of preparation
EBIT by segment
1
Percentage of DKK 19,794 million in 2022
1 EBIT of DKK 19,794 million is calculated as EBIT
for reportable segments.
16.8 %
Return on capital employed totalled
16.8 % in 2022 against 14.8 % in 2021.
EBITDA and EBIT
DKKbn
Return on capital employed
DKKbn
16.8
14.8
28.5
23.1
2018
19.0
11.6
2019
24.3
16.2
20212020
16.6
9.0
8.3
12.2
30.2
2022
2021
2020
2019
2018
EBITDA 32.1 bn
EBIT
1
19.8 bn
2022
51 %
Offshore
39 %
Bioenergy
& Other
10 %
Onshore
81 Ørsted annual report 2022
Financial statements Notes | 2. Return on capital employed
82 Ørsted annual report 2022
Financial statements Notes | 2.1 Segment information
83
Ørsted annual report 2022
Financial statements Notes | 2.1 Segment information
84
Ørsted annual report 2022
Financial statements Notes | 2.1 Segment information
85 Ørsted annual report 2022
Financial statements Notes | 2.2 Revenue
86 Ørsted annual report 2022
Financial statements Notes | 2.2 Revenue
87 Ørsted annual report 2022
Financial statements Notes | 2.3 Cost of sales
88 Ørsted annual report 2022
Financial statements Notes | 2.4 Government grants / 2.5 Research and development expenditures
89 Ørsted annual report 2022
Financial statements Notes | 2.6 Other operating income and expenses
90 Ørsted annual report 2022
Financial statements Notes | 2.7 Employee costs
91 Ørsted annual report 2022
Financial statements Notes | 2.8 Share-based payment
92
Ørsted annual report 2022
Financial statements Notes | 2.8 Share-based payment
71 %
Offshore
28 %
Onshore
1 %
Bioenergy
& Other
70 %
Offshore
23 %
Onshore
7 %
Bioenergy
& Other
Capital employed by segment
1
% 2022
Gross investments by segment
% 2022
93 Ørsted annual report 2022
Financial statements Notes | 3. Capital employed
94 Ørsted annual report 2022
Financial statements Notes | 3.1 Acquisition of enterprises
95 Ørsted annual report 2022
Financial statements Notes | 3.1 Acquisition of enterprises
96 Ørsted annual report 2022
Financial statements Notes | 3.2 Divestment of enterprises
Production assets by segment, % 2022
DKK 119,211 million
Property, plant, and equipment
under construction by segment, % 2022
DKK 48,931 million
Onshore
35 %
Onshore
20 %
Bioenergy & Other
Bioenergy & Other
5 %
1 %
Offshore
60 %
Offshore
79 %
97 Ørsted annual report 2022
Financial statements Notes | 3.3 Intangible assets, and property, plant, and equipment
Production assets by segment, % 2021
DKK 95,618 million
Property, plant, and equipment
under construction by segment, % 2021
DKK 57,108 million
Onshore
34 %
Onshore
16 %
Bioenergy & Other
7 %
Offshore
59 %
Offshore
84 %
98 Ørsted annual report 2022
Financial statements Notes | 3.3 Intangible assets, and property, plant, and equipment
99 Ørsted annual report 2022
Financial statements Notes | 3.3 Intangible assets, and property, plant, and equipment
100 Ørsted annual report 2022
Financial statements Notes | 3.3 Intangible assets, and property, plant, and equipment
101 Ørsted annual report 2022
Financial statements Notes | 3.3 Intangible assets, and property, plant, and equipment
102 Ørsted annual report 2022
Financial statements Notes | 3.4 Inventories
103 Ørsted annual report 2022
Financial statements Notes | 3.5 Contract assets and liabilities
104 Ørsted annual report 2022
Financial statements Notes | 3.6 Trade receivables / 3.7 Other receivables and other payables
105 Ørsted annual report 2022
Financial statements Notes | 3.8 Tax equity liabilities
106 Ørsted annual report 2022
Financial statements Notes | 3.9 Provisions and contingent liabilities
107 Ørsted annual report 2022
Financial statements Notes | 3.9 Provisions and contingent liabilities
108 Ørsted annual report 2022
Financial statements Notes | 3.10 Non-controlling interests
Corporate income tax paid by segment, 2022
DKKm
Offshore
Onshore
Bioenergy & Other
Ørsted A/S and other activities
To ta l
1,272
(572)
572
(9)
2022
DKKm
Profit (loss)
before tax Ta x Tax in %
Tax equity, deferred tax liability - (354) n.a.
Gain (loss) on divestment of enter-
prises and assets 11,173 - 0 %
Other adjustments (1,036) n.a.
Remaining business 6,436 (1,223) 19 %
Effective tax for the year 17,609 (2,613) 15 %
‘Other adjustments’ include changes in tax rates, movements in uncertain tax
positions, tax concerning previous years, and unrecognised tax losses.
Development in current and deferred tax asset and liabilities (tax, net), 2022
DKKm
Tax, net asset
Tax on profit (loss) for the year
Tax on other comprehensive income
Corporate taxes paid
Other effects
3,844
1,609
1,263
(236)
(2,613)
2021 2022
(649)
15 %
Effective tax rate (ETR) for the
Group for 2022 was 15 % against
18 % in 2021.
Group ETR
%
1,263
109 Ørsted annual report 2022
Financial statements Notes | 4. Tax
110 Ørsted annual report 2022
Financial statements Notes | 4.1 Approach to taxes
111 Ørsted annual report 2022
Financial statements Notes | 4.1 Approach to taxes
112 Ørsted annual report 2022
Financial statements Notes | 4.2 Tax on profit (loss) for the year
113 Ørsted annual report 2022
Financial statements Notes | 4.2 Tax on profit (loss) for the year
114 Ørsted annual report 2022
Financial statements Notes | 4.3 Deferred tax
115 Ørsted annual report 2022
Financial statements Notes | 4.3 Deferred tax
Net deferred tax and accumulated investments, 2022
DKKbn
Net deferred tax balance
Accumulated net investments
The figure shows the net deferred tax assets (+) or liabilities (-) at country level as well as total net accumulated
investments in each country. The distribution of net investments is affected by the sale of assets constructed
by Ørsted in Denmark for operations outside Denmark where Ørsted only has part ownership. Jurisdictions not
yet material are excluded from the overview.
7.5
36.0
Denmark
2.0
74.6
The UK
1.0
21.8
Germany
0.1
5.7
The
Netherlands
-4.2
74.4
The US
0.6
24.7
Taiwan
-0.6
5.3
Ireland
0.0
1.5
Poland
116 Ørsted annual report 2022
Financial statements Notes | 4.3 Deferred tax
Payments, corporate taxes
DKKm
Current year
Previous years
As our business matures, we start to incur corporate taxes in the countries where we operate. Again in 2022,
corporate taxes in Denmark are affected by the high volatility of power prices. This affects the Danish
corporate taxes due to how we manage our risk. Our corporate taxes in Taiwan derive from gains in our local
service companies as well as withholding taxes paid on behalf of the Danish lender.
6
720
233
42
247
15
1,263
Denmark The UK The
Netherlands
TaiwanGermany Other countries Tota l
117 Ørsted annual report 2022
Financial statements Notes | 4.4 Our tax footprint
Cash flow
0
Profit (loss)
before tax
Project phases
Development
~2-6 years
Construction
~2-4 years
Operation
~25-30 years
Consents and permits
Site investigations
Capital investment
Asset construction
Staff and contractors
Revenue
Operating expenses
Profit
Late-life development
Decommissioning
Indirect taxes
Employment taxes
Indirect taxes
Employment taxes
Corporate income taxes
Indirect taxes
Employment taxes
Corporate income taxes
Indirect taxes
Employment taxes
Wind farm life cycle example
Taxable
income
Development activities results in negative cash
flows in the beginning of the project life cycle. During
construction, the capital employed accelerates mate-
rially. Positive income begins when the project enters
operation.
Some corporate income taxes may be paid during
development if internal development services are
provided between tax jurisdictions.
Also, corporate income taxes may be paid during
late-life development subject to deductibility of
decommissioning costs and joint taxation legislation.
118 Ørsted annual report 2022
Financial statements Notes | 4.4 Our tax footprint
4,745
6,500
1,755
Borne 1,263 195 297
Collected 550
To ta l 1,813
1,886 2,309
2,081 2,309 297
Total tax contribution
DKKm
Profit People Product Property
119 Ørsted annual report 2022
Financial statements Notes | 4.4 Our tax footprint
People 195
Property 297
Product
Profit 1,263 550
1,886
2,309
1,755
4,745
Taxes by tax type
DKKm
Taxes borne Taxes collected
Total tax contribution
DKKm
Asia
Taiwan
256 17
Malaysia
15 24
Singapore
1 0
America
The US
246 197
Our total tax contribution in 2022 totalled DKK 6,500 million against DKK 5,590
million in 2021. The increase primarily relates to acquisitions in late 2021 in Ireland
and the UK, which increased product taxes, increased activity in our onshore
business in the US, which increased property taxes, and an increase in presence in
Poland, the US, and Malaysia, which increased people taxes.
Europe
Denmark
42 3,274
The UK
836 768
Germany
233 36
Ireland
30 188
Sweden
2 201
Poland
52 18
The Netherlands
42 22
Taxes by country
DKKm
Taxes borne Taxes collected
120 Ørsted annual report 2022
Financial statements Notes | 4.4 Our tax footprint
121 Ørsted annual report 2022
Financial statements Notes | 4.4 Our tax footprint
47.1 4.0
36.1 3.1
Equity and interest-bearing net debt
DKKbn
Interest-bearing asset
Interest-bearing debt
Hybrid capital
Equity attributable to share-
holders in Ørsted A/S
Non-controlling interests
2022
2021
126.1 bn
109.4 bn
77.7 19.8 71.7
60.4 18.0 64.0
122 Ørsted annual report 2022
Financial statements Notes | 5. Capital structure
123 Ørsted annual report 2022
Financial statements Notes | 5.1 Interest-bearing debt and FFO
124 Ørsted annual report 2022
Financial statements Notes | 5.1 Interest-bearing debt and FFO
2023 2024 202 5 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035+
Maturity profile of issued senior bonds and bank debt
DKK billion
Issued bonds
Bank debt
The majority of our bonds expire in 2031 or later.
3.1
6.3
6.7
2.1
9.4
4.5
3.8
1.4
0.1
0.1
8.1
7.4
10.8
125 Ørsted annual report 2022
Financial statements Notes | 5.1 Interest-bearing debt and FFO
2020 2021 2022
2.1
0.9
1.5
The graph shows the proposed dividends in relation
to the closing price for an Ørsted share on the last
trading day of the year.
Dividend yield
%
126 Ørsted annual report 2022
Financial statements Notes | 5.2 Equity
127 Ørsted annual report 2022
Financial statements Notes | 5.2 Equity
-
128 Ørsted annual report 2022
Financial statements Notes | 5.3 Hybrid capital
Liquidity reserve
DKKbn
Cash Securities, available Undrawn, non-cancellable credit facilities
Collateral and margin postings
DKKbn
Initial margin Variation margin Credit support annex Other collateral
Dec. 2021
Dec. 2021
Dec. 2022
Dec. 2022
97.8 bn
17.3 bn
43.2 bn
12.3 bn
129 Ørsted annual report 2022
Financial statements Notes | 5.4 Liquidity reserve
130 Ørsted annual report 2022
Financial statements Notes | 5.4 Liquidity reserve
131 Ørsted annual report 2022
Financial statements Notes | 5.5 Maturity analysis of financial liabilities
132 Ørsted annual report 2022
Financial statements Notes | 5.6 Financial income and expenses
Outright
power
Spread
(power)
Gas and Oil
GBP NTDUSD
1 For USD and NTD, we manage our risk of a natural time spread between
front-end capital expenditures and long-term revenue. In the five year horizon,
we are therefore seeing that our hedges increase our net exposure to USD, but
our hedges reduce the USD risk in the longer horizon.
We have a substantial exposure towards EUR. However, we do not deem
EUR to constitute a risk, as we expect Denmark to maintain its fixed exchange-
rate policy.
Energy exposure 2023-2027
2
DKKbn
Before hedging After hedging
-1.1
-0.1
106.0
40.3
6.7 5.9
Currency exposure 2023-2027
1
DKKbn
Before hedging After hedging
-12.8
1.0
45.9
13.9
7.7 7.7
2 Energy exposure before hedging is excluding
revenue from fixed tariffs and guaranteed minimum
prices as these do not contain any energy exposure.
Our outright power exposure has increased
significantly in 2022 due to the large increase in
power prices.
133 Ørsted annual report 2022
Financial statements Notes | 6. Risk management
134 Ørsted annual report 2022
Financial statements Notes | 6.1 Market risk policy
2022 2023 2024 2025 2026
500
600
700
800
900
1.000
20
21
22
23
24
25
2020 2021 2022 2023
Forward ratesHistorical rates
2024
The graph shows the historic development in spot currency rates for the past three years
and the forward rates for 2023 and 2024 as of 31 December 2022.
The graph shows our GBP exposure before and after hedges from:
– divestments and investments
– green certificates
– hedged energy.
GBP exposures
DKKbn
Before hedging After hedging
Development in currency rates
DKKbn
GBP USD NTD
10.8
-0.3
10.1
-0.4
10.4
3.9
9.5
6.7
5.1
4.0
135 Ørsted annual report 2022
Financial statements Notes | 6.2 Currency risks
136 Ørsted annual report 2022
Financial statements Notes | 6.2 Currency risks
137 Ørsted annual report 2022
Financial statements Notes | 6.2 Currency risks
138 Ørsted annual report 2022
Financial statements Notes | 6.2 Currency risks
0
1.000
2.000
3.000
4.000
2020 2021 2022 2023
Forward ratesHistorical rates
2024
0
1.000
2.000
3.000
4.000
2020 2021 2022 2023
Forward ratesHistorical rates
2024
Time
Volume
Development in power prices
DKK
DK
1
UK
US (ERCOT)
2
The graph shows the historic development in monthly average spot power prices for
the past three years and the forward rates for 2023 and 2024 as of 31 December 2022.
The graph covers our main markets where we are exposed to power prices.
1 Average of DK1 and DK2.
2 Average of North and West.
Intermittency risk
Intermittency risk Fixed-volume hedges
The light blue area illu strates the intermittency risk where our actual production is
either above or below the fixed volume in our hedges. When the additional value of the
production (volume x market price) in area 1 does not match the missing value of the
production in area 2, our actual production will not fully match our fixed-volume hedges.
1
2
Actual
production
profile
Flat profile in
fixed-volume
hedges
139 Ørsted annual report 2022
Financial statements Notes | 6.3 Energy and commodity price risks
The UK The US Other
20252023 202720262024
Offshore’s power price exposure
DKKbn
Before hedging After hedging
Ørsted´s power price exposure before hedges
for 2023-2027 split on markets
DKKbn
20.5
3.0
50.9
15.3
4.4
15.3
12.4
5.8
9.9
7.8
64.0
9.5
7.5
The table shows our total exposure towards power
prices before hedges for the period 2023-2027.
The table shows the exposure of Offshore’s generation of power before and after hedges.
140 Ørsted annual report 2022
Financial statements Notes | 6.3 Energy and commodity price risks
141 Ørsted annual report 2022
Financial statements Notes | 6.3 Energy and commodity price risks
15 %
20 %
25 %
35 %
Revenue
incl. hedges
Other
EBITDA
EBITDA Debt Hedges of
future debt
EBITDA,
net debt
& hedges
50 %
35 %
50 %
30 %
40 %
Inflation exposure from Offshore and Onshore assets
Fixed nominal Inflation-indexed Merchant
2023-2032 nominal
cash flow from Offshore
& Onshore assets
Active use of debt
& hedges to mitigate
inflation risk
142 Ørsted annual report 2022
Financial statements Notes | 6.4 Inflation and interest rate risks
143 Ørsted annual report 2022
Financial statements Notes | 6.4 Inflation and interest rate risks
144 Ørsted annual report 2022
Financial statements Notes | 6.5 Credit risks
145 Ørsted annual report 2022
Financial statements Notes | 6.6 Fair value measurement
146 Ørsted annual report 2022
Financial statements Notes | 6.6 Fair value measurement
0
50
100
150
200
250
300
2021 2022
Daily position in the trading portfolio, market trading mandates
3
DKKm
Board of Directors’ mandate Value at risk (VaR)
147 Ørsted annual report 2022
Financial statements Notes | 6.7 Energy trading portfolio
148 Ørsted annual report 2022
Financial statements Notes | 6.8 Categories of financial instruments
149 Ørsted annual report 2022
Financial statements Notes | 6.9 Sensitivity analysis of financial instruments
150 Ørsted annual report 2022
Financial statements Notes | 7. Other notes
151 Ørsted annual report 2022
Financial statements Notes | 7.2 Auditor’s fees
152 Ørsted annual report 2022
Financial statements Notes | 7.3 Alternative performance measures
153 Ørsted annual report 2022
Financial statements Notes | 7.4 Company overview
154 Ørsted annual report 2022
Financial statements Notes | 7.5 Events after the reporting period
Consolidated ESG statements
(additional information)
156 Basis of reporting
157 ESG performance indicators
160 Accounting policies
This year, we made a first-of-its-kind agreement
with North America’s Building Trades Unions
to construct our US offshore wind farms with a
union workforce based in the US.
The agreement sets a high bar for working
conditions, injects millions of dollars into the
economy, creates training and job opportunities
for those most impacted by environmental
injustice, and ensures our projects will be built by
the safest and best-trained workers in the US.
155 Ørsted annual report 2022
Financial statements
15.1 GW
Our installed renewable capacity
increased by 17 % from 2021 to
2022. We have a target of ~50 GW
installed renewable capacity in 2030.
91 %
The green share of our heat and power
generation increased to 91 % in 2022.
We have a target of 99 % in 2025.
60 g CO
2
e/kWh
Our scope 1 and 2 greenhouse gas
intensity was 60 g CO
2
e/kWh in 2022.
Our targets are to reach 10 g CO
2
e/kWh
in 2025 and 1 g CO
2
e/kWh in 2040.
73 %
In 2022, 73 % of Ørsted’s
revenue was associated with
taxonomy-aligned activities.
Consolidated environmental, social, and
governance (ESG) statements
Our full ESG data set can be seen in the
independent publication ‘ESG performance
report 2022’. The ESG performance report
also includes additional information, such
as selected ESG indicators by country and
all ESG accounting policies, including a list
of references for conversion factors used
in calculations.
Scope and consolidation
Unless otherwise stated, ESG data is reported
on the basis of the same principles as the
financial statements. Thus, the consolidated
ESG statements include consolidated data
from the parent company Ørsted A/S and
subsidiaries controlled by Ørsted A/S. Joint
operations are also included with Ørsted’s
proportionate share. Data from associates
and joint ventures is not included.
The consolidation of safety data deviates
from the above-described principles. Safety
data is collected using an operational scope.
This means that irrespective of our owner-
ship share, we include 100 % of injuries and
hours worked, etc., arising from all opera-
tions where Ørsted is responsible for safety,
including safety related to external suppli-
ers. Data from acquisitions and divestments
is included or excluded from the date of
acquisition or divestment.
Danish Financial Statements Act,
sections 99 a, 99 b, and 107 d
Pursuant to section 99 a of the Danish Finan-
cial Statements Act (Årsregnskabsloven),
Ørsted is under an obligation to account for
the company’s sustainability activities and
report on business strategies and activities
with regard to human rights, labour rights,
anti-corruption, the environment, and the
climate. By publishing our sustainability re-
port (orsted.com/sustainability2022 ), Ørsted
complies with section 99 a of the Danish
Financial Statements Act.
Ørsted’s work for increased gender
diver sity at leadership level is reported
in accordance with section 99 b of the
Danish Financial Statements Act in our
ESG performance report 2022
(orsted.com/ESGperformance2022).
Reporting on diversity in accordance with
section 107 d of the Danish Financial State-
ments Act can be seen in our sustainability
report (orsted.com/sustainability2022 ).
Taxonomy Regulation (EU) 2020/852
In line with Regulation (EU) 2020/852, we
disclose our taxonomy-aligned share of
revenue (turnover), CAPEX, and OPEX for
2022. The results and full details, including
accounting policies, can be found in the
ESG performance report 2022 (orsted.com/
ESGperformance2022), and highlights are
presented as part of the sustainability pro-
grammes in the sustainability report 2022.
Business changes in 2022 affecting ESG data
There were no material business changes
impacting the ESG data in 2022.
New ESG indicators in 2022 consolidated
ESG statements
– Taxonomy-aligned revenue, CAPEX,
OPEX, and EBITDA.
– Gender with lowest representation
(female): senior directors and above
and people leaders.
Basis of reporting
In the consolidated ESG statements, we present our results,
objectives, and accounting policies for the ESG data, including
business drivers and taxonomy-aligned data, which is
presented in the management’s review in this report.
Our full ESG data set can be seen
in the ESG performance report 2022
(orsted.com/ESGperformance2022 )
156 Ørsted annual report 2022
Financial statements Consolidated ESG statements (additional information) | Basis of reporting
Taxonomy-aligned KPIs Unit 2022 2021
Taxonomy-aligned revenue (turnover) % 73 66
1
Taxonomy-aligned CAPEX % 99 99
1
Taxonomy-aligned OPEX % 80 80
1
Taxonomy-aligned EBITDA (voluntary) % 85 90
1
Business drivers Target 2022 2021
Installed renewable capacity MW ~50 GW (2030) 15,121 12,977
Offshore MW ~30 GW (2030) 8,871 7,551
Onshore MW ~17.5 GW (2030)
2
4,175 3,351
Other (incl. PtX) MW ~2.5 GW (2030) 2,075 2,075
Decided (FID’ed) renewable capacity MW 4,340 4,725
Offshore MW 2,196 3,386
Onshore MW 2,072 1,337
Other (incl. PtX) MW 72 2
Awarded and contracted renewable capacity MW 11,222 8,435
Offshore MW 11,157 8,435
Onshore MW 65 -
Sum of installed and FID’ed renewable capacity MW 19,461 17,702
Offshore MW 11,067 10,937
Onshore MW 6,247 4,688
Other (incl. PtX) MW 2,147 2,077
Firm renewable capacity (installed, FID’ed,
and awarded/contracted capacity) MW 30,683 26,137
Total heat and power generation GWh 42,009 36,957
Power generation GWh 35,641 29,050
– Offshore GWh 16,483 13,808
– Onshore GWh 13,146 8,352
– Bioenergy & Other GWh 6,012 6,890
Heat generation, Bioenergy & Other GWh 6,368 7,907
Taxonomy-aligned KPIs
Our share of revenue (turnover) associated with
taxonomy-aligned activities in 2022 was 73 %.
This proportion included revenue from our wind
and solar farms (65 %) and from our sustainable
biomass-based generation activities at our
combined heat and power (CHP) plants (8 %).
Business drivers
The installed renewable capacity increased
by 17 % in 2022 due to the commissioning of
Hornsea 2 (offshore wind, 1,320 MW), Haystack
(onshore wind, 298 MW), Helena Wind (onshore
wind, 268 MW), Kennoxhead (onshore wind,
62 MW), Ford Ridge (onshore wind, 121 MW) and
the acquistion of Ostwind (75 MW).
The total energy generation increased by 14 %
in 2022, driven by increased offshore and onshore
generation capacities and higher offshore wind
speeds.
Offshore wind power generation increased by
19 % to 16.5 TWh in 2022. The increase was mainly
due to generation from Hornsea 2 commissioned in
2022 and higher wind speeds.
Onshore power generation increased by
57 % to 13.1 TWh in 2022. The increase was due to
additional generation from our new onshore wind
farms installed in 2022 and full-year effects from
wind farms installed in 2021. It was also due to the
full-year effect from the two US solar farms com-
missioned in 2021 and a new solar farm coming
online in 2022.
Heat and power generation in Bioenergy &
Other decreased by 16 % in 2022. This was due to
lower heat demand in 2022 as a result of warmer
weather and a decrease in power generation from
the CHP plants due to the lower heat demand,
partly offset by increased condensing power
generation due to higher power spot prices.
1 2021 numbers are taxonomy-eligible
proportions.
2 The 17.5 GW (2030) target is for onshore wind
power, solar PV, and battery storage combined.
ESG performance indicators
157 Ørsted annual report 2022
Financial statements Consolidated ESG statements (additional information) | ESG performance indicators
Business drivers (continued) Unit Target 2022 2021
Green share of energy generation % 99 (2025) 91 90
– Bioenergy & Other % 68 76
Offshore
Generation capacity MW 4,672 3,970
Wind speed m/s 9.5 9.1
Wind speed, normal wind year m/s 9.7 9.7
Availability % 94 94
Load factor % 42 39
Power sales GWh 33,745 25,020
Onshore
1
Wind speed m/s 7.4 7.4
Wind speed, normal wind year m/s 7.3 7.6
Availability, wind % 93 96
Load factor, wind % 40 42
Availability, solar PV % 98 96
Load factor, solar PV % 25 24
Bioenergy & Other
Degree days, Denmark Number 2,548 2,820
Gas sales GWh 31,637 61,349
Power sales GWh 5,399 8,797
Ørsted
Power sales
2
GWh 33,745 25,020
Environment Target 2022 2021
Direct greenhouse gas (GHG) emissions (scope 1) Thousand tonnes CO
2
e 2,510 2,142
Indirect GHG emissions (scope 2), location-based Thousand tonnes CO
2
e 45 53
Indirect GHG emissions (scope 2), market-based Thousand tonnes CO
2
e 1 1
Indirect GHG emissions (scope 3) Thousand tonnes CO
2
e 50 % reduction (2032)
3
10,983 18,179
– Category 2: Capital goods
4
Thousand tonnes CO
2
e 1,456 1,621
– Category 3: Fuel- and energy-related activities
5
Thousand tonnes CO
2
e 1,836 2,011
– Category 11: Use of sold products
6
Thousand tonnes CO
2
e 90 % reduction (2040)
3
7,309 14,206
– Other Thousand tonnes CO
2
e 382 341
GHG intensity (scope 1 and 2) g CO
2
e/kWh 10 (2025)
, 1 (2040) 60 58
GHG intensity (scope 1, 2, and 3) g CO
2
e/kWh 2.9 (2040)
7
147 165
Business drivers (continued)
The green share of energy generation increased to
91 % in 2022. This was primarily due to increased
renewable generation from offshore wind, onshore
wind, and solar PV, partly offset by reduced
generation from sustainable biomass. Our target is
99 % green energy generation by 2025.
Offshore wind speeds were slightly higher in
2022, while availability continued to be at 94 %,
resulting in the load factor increasing by 3 percent-
age points to 42 % in 2022. Onshore wind speeds
were the same in 2022 as in 2021. Availability and
load factor decreased by 3 percentage points and
2 percentage points in 2022, respectively.
Gas sales decreased by 48 % to 31.6 TWh in
2022. This was primarily due to lower UK sourcing
volumes and lower offtake on our Gazprom Export
supply contract.
Power sales (Offshore) increased by 8.7 TWh
to 33.7 TWh in 2022, primarily due to increased
volumes sold from third-party wind farms where
we are responsible for balancing and increased
volumes sold on behalf of our partners. Power
sales (Bioenergy & Other) decreased by 3.4 TWh
to 5.4 TWh in 2022, primarily due to the phasing
out of our UK B2B business.
Environment
Our greenhouse gas (GHG) intensity (scope 1 and
2) increased by 3 % to 60 g CO
2
e/kWh in 2022 due
to increased GHG emissions from coal consumption,
partly offset by increased energy generation. Coal
consumption increased due to the energy crisis in
Europe and a fire in a wood pellet silo at Studstrup
Power Station. We are well on track to meeting our
target of a GHG emission intensity of no more than
10 g CO
2
e/kWh in 2025, assuming we are allowed
by the Danish authorities to close down our coal-
based generation in 2024.
Our scope 3 GHG emissions were reduced by
40 % from 2021 to 2022. The main driver for this
was the 48 % decrease in gas sales.
1 For 2021, data is shown for US only.
2 Offshore is responsible for Ørsted’s total power
sales, including internal power sales to Bioenergy &
Other, which are eliminated at Group level.
3 A reduction from the adjusted base year 2018.
4 Primary source of emissions: upstream GHG
emissions from new assets commissioned.
5 Primary source of emissions: regular power sales.
6 Primary source of emissions: natural gas sales.
7 Excludes scope 3 emissions from use of sold
products (natural gas sales).
158 Ørsted annual report 2022
Financial statements Consolidated ESG statements (additional information) | ESG performance indicators
Social Unit Target 2022 2021
Employees
Total number of employees (as of 31 December) FTEs 8,027 6,836
– Gender with lowest representation (female), senior directors
and above % 40 (2030) 22 19
– Gender with lowest representation (female), people leaders % 40 (2030) 31 30
– Gender with lowest representation (female), all employees % 40 (2030) 33 31
Average number of employees during the year FTEs 7,428 6,508
Employee satisfaction Index 0-100 Top 10 %
1
76 77
Safety
Total recordable injury rate (TRIR) Injuries per million hours worked 2.5 (2025) 3.1 3.0
Fatalities Number 0 0
Governance 2022 2021
Board of Directors, Ørsted A/S
Independent board members % 88 88
Members, female Number 3 3
Members, male Number 5 5
Gender with lowest representation (female) % 38 38
Group Executive Team
Members, female Number 3 2
Members, male Number 8 4
Gender with lowest representation (female) % 27 33
Substantiated whistle-blower cases Number 8 5
– Cases transferred to the police Number 1 0
Social
The number of employees increased by 17 % from
2021 to 2022 due to growth in both existing and
new markets.
Employee satisfaction continued to be high.
With a satisfaction and motivation score of 76 in
2022, we were above our external survey provider’s
benchmark but below our target of being in the
top 10 % compared to our benchmark peer group.
Our total recordable injury rate (TRIR) increased
from 3.0 in 2021 to 3.1 in 2022. The increase was
driven by an increased amount of TRIs among con-
tractor employees, partly offset by a reduction in
TRIs from our own employees. Total hours worked
was at the same level in 2022 as in 2021. As part
of our efforts to improve safety, dedicated TRIR
reduction plans have been implemented in 2022,
including increased leadership involvement and
leadership interventions, safety stand-downs, and
targeted safety campaigns on specific issues.
Governance
Our employees and other associates may report
serious offences, such as cases of bribery, fraud,
and other inappropriate or illegal conduct, to our
whistle-blower scheme or through our manage-
ment system.
In 2022, eight substantiated cases of inappropri-
ate or unlawful behaviour were reported through
our whistle-blower scheme. Six cases related to
violations of our ‘Good business conduct policy’,
while one case concerned IT security, and one
case concerned workplace environment. None of
the reported cases were critical to our business,
nor caused adjustments to our financial results.
One case required a police report.
1 Our target is to have an employee satisfaction
survey result in the top ten percentile compared to
an external benchmark group.
159 Ørsted annual report 2022
Financial statements Consolidated ESG statements (additional information) | ESG performance indicators
Accounting policies
Taxonomy-aligned KPIs
Taxonomy-aligned revenue (turnover)
The share of our taxonomy-aligned revenue (turnover)
is calculated as the revenue derived from products or
services associated with taxonomy-aligned economic
activities as a proportion of our total revenue (see p. 85).
Taxonomy-aligned CAPEX
The share of our taxonomy-aligned CAPEX is calcu-
lated as the CAPEX related to assets or processes
associated with taxonomy- aligned economic activities
as a proportion of our CAPEX that is accounted for
based on IAS 16 (73: (e)(i) and (iii)), IAS 38 (118: (e)(i)), and
IFRS 16 (53: (h)) and thereby included in ‘Additions’ and
‘Addition on acquisition of enterprises’ (see p. 97).
Carbon emission allowances have been excluded from
the total CAPEX (DKKm) as these are of an operational
nature. Goodwill has also been excluded.
Taxonomy-aligned OPEX
The share of our taxonomy-aligned OPEX is calculated
as the OPEX related to assets or processes associated
with taxonomy-aligned economic activities as a pro-
portion of our OPEX that is included in ‘Other external
expenses’ (see p. 71).
We have chosen to use ‘Other external expenses’ as
this is currently the best-available OPEX number in our
Group financial accounts that is related to the OPEX
KPI definition in the regulation.
Taxonomy-aligned EBITDA (voluntary)
This is a voluntary disclosure. The share of our
taxonomy -aligned EBITDA is calculated as the EBITDA
derived from products or services associated with
taxonomy-aligned economic activities as a proportion
of our total EBITDA (see p. 71).
We have included taxonomy-aligned EBITDA as a
voluntary disclosure as EBITDA better reflects our busi-
ness than revenue. This is because we have an uneven
margin on our revenue, where our gas business and sale
of power to end customers have a large revenue but a
small earnings margin, whilst other areas have a higher
margin.
Business drivers
Installed renewable capacity
The installed renewable capacity is calculated as re-
newable gross capacity installed by Ørsted accumulat-
ed over time. We include all capacities after commer-
cial operation date (COD) has been reached, and where
we had an ownership share and an EPC (engineering,
procurement, and construction) role in the project.
Capacities from acquisitions are added to the installed
capacity. For installed renewable thermal capacity, we
use the heat capacity as heat is the primary outcome
of thermal energy generation, and as bioconversions
of the combined heat and power plants are driven by
heat contracts.
Decided (FID’ed) renewable capacity
Decided (FID’ed) capacity is renewable capacity where
a final investment decision (FID) has been made.
Awarded and contracted renewable capacity
The awarded renewable capacity is based on the
capacities which have been awarded to Ørsted in
auctions and tenders. The contracted capacity is the
capacity for which Ørsted has signed a contract or
power purchase agreement (PPA) concerning a new
renewable energy plant. We include the full capacity if
more than 50 % of PPAs or offtake are secured. Acquired
projects with pre-FID capacity are also included in the
awarded and contracted renewable capacity.
Heat and power generation
Power generation from wind and solar farms is de-
termined as generation sold. The offshore wind farms
Gunfleet Sands 1 & 2 and Walney 1 & 2 have been
consolidated according to ownership interest. Other
wind farms, solar farms, and CHP plants have been
financially consolidated.
Thermal power generation is determined as net
generation sold, based on settlements from the official
Danish production database. Data for generation from
foreign facilities is provided by the operators.
Heat (including steam) generation is measured as
net output sold to heat customers.
Power generation capacity
Power generation capacity for an offshore wind farm
is calculated and included from the time when the
individual wind turbine has passed a 240-hour test.
The offshore wind farms Gunfleet Sands 1 & 2 and
Walney 1 & 2 have been consolidated according to
ownership interest. Other wind farms have been finan-
cially consolidated.
Wind speeds
Wind speeds for the areas where Ørsted’s offshore and
onshore wind farms are located are provided to Ørsted
by an external supplier. Wind speeds are weighted on
the basis of the capacity of the individual wind farms
and consolidated to an Ørsted total for offshore and
onshore, respectively. ‘Normal wind speed’ is a his-
torical wind speed average (over a minimum 20-year
period).
Availability
Availability is calculated as the ratio of actual produc-
tion to the possible production, which is the sum of lost
production and actual production in a given period.
The production-based availability (PBA) is impacted
by grid and wind turbine outages, which are technical
production losses. PBA is not impacted by market-
requested shutdowns and wind farm curtailments as
these are due to external factors.
Load factor
The load factor is calculated as the ratio between
actual generation over a period relative to potential
generation, which is possible by continuously exploit-
ing the maximum capacity over the same period. The
load factor is commercially adjusted. This means that
the offshore wind farm has been financially compen-
sated by the transmission system operators when
it is available for generation, but the output cannot
be supplied to the grid due to maintenance or grid
interruptions. New offshore wind turbines are included
in the calculations of availability and load factor once
they have passed a 240-hour test. Onshore wind tur-
bines are included once they have passed commercial
operation date (COD).
Degree days
The number of degree days expresses the difference
between an average indoor temperature of 17 °C and
the outside mean temperature for a given period. It
helps compare the heat demand for a given year with
a normal year.
Sales
Sales of gas and power are calculated as physical
sales to retail customers, wholesale customers, and
exchanges. Sales are based on readings from Ørsted’s
trading systems. Internal sales to our CHP plants are
not included in the statement.
Environment
Green share of energy generation
The green (renewable energy) share of our heat and
power generation is calculated on the basis of the
energy sources used and the energy generated at the
different assets.
For combined heat and power (CHP) plants, the share
of the specific fuel (e.g. sustainable biomass) is calcu-
lated relative to the total fuel consumption for a given
plant or unit within a given time period. The specific
fuel share is then multiplied by the total heat and
power generation for the specific plant or unit in the
specific period. The result is the fuel-based generation
for the individual unit, for example the sustainable
biomass-based generation of heat and power from the
CHP plant unit within a given time period.
The percentage shares of the individual energy sources
are calculated by dividing the generation from the
individual energy source by the total generation.
The following energy sources and fuels are considered
to be renewable energy: wind, solar PV, sustainable
biomass, biogas, and power sourced with renewable
energy certificates. The following energy sources are
considered to be fossil energy sources: coal, natural
gas, and oil.
Green share of energy generation, Bioenergy & Other
This is calculated as the green share of heat and power
generation, but is only shown for the business unit
Bioenergy & Other.
160 Ørsted annual report 2022
Financial statements Consolidated ESG statements (additional information) | Accounting policies
Greenhouse gas (GHG) intensity
GHG intensity (scope 1 and 2) is calculated as total
scope 1 and scope 2 (market-based) emissions divided
by total heat and power generation, revenue, and
EBITDA, respectively.
GHG intensity (scope 1, 2, and 3) is calculated as total
scope 1, scope 2 (market-based), and scope 3 (exclud-
ing natural gas sales) emissions divided by total heat
and power generation.
Scope 1 and 2 greenhouse gas (GHG) emissions
Scope 1 and 2 GHG emissions are calculated based on
the Greenhouse Gas Protocol.
Scope 1 GHG emissions include all direct emissions
of greenhouse gases from Ørsted: carbon dioxide,
methane, nitrous oxide, and sulphur hexafluoride.
The direct carbon emissions from the combined heat
and power plants are determined on the basis of
the fuel quantities used in accordance with the EU
Emissions Trading System (ETS). Carbon dioxide and
other greenhouse gas emissions outside the EU ETS
scheme are, for the most part, calculated as energy
consumption multiplied by emission factors.
Scope 2 GHG emissions include the indirect GHG emis-
sions from the generation of power, heat, and steam
purchased and consumed by Ørsted. Scope 2 emissions
are primarily calculated as the power volumes pur-
chased multiplied by country-specific emission factors.
Location-based emissions are calculated based on
average emission factors for each country, whereas
market-based emissions take the renewable power
purchased into account and assume that the regular
power is delivered as residual power where the renew-
able part has been taken out.
Scope 3 greenhouse gas (GHG) emissions
Scope 3 GHG emissions are reported based on the
Greenhouse Gas Protocol, which divides the scope 3
inventory into 15 sub-categories.
GHG emissions from capital goods include upstream
GHG emissions from acquired and installed wind and
solar farms in the month when the wind or solar farm
has reached commercial operation date (COD). Carbon
emissions are included from cradle to operations.
GHG emissions from fuel- and energy-related activities
are calculated based on actual fuel consumption and
power sales, multiplied by relevant emission factors.
We include all power sales to end customers and use
separate emission factors for green (with renewable
certificates) and regular (without renewable certifi-
cates) power sales.
GHG emissions from use of sold products are calcu-
lated based on actual sales of gas to both end users
and wholesalers as reported in our ESG consolidation
system. The total gas sale is divided into natural gas,
LNG, and biogas, which have specific upstream and
downstream emission factors.
‘Other’ includes GHG emissions from:
– category 1: Purchased goods and services
– category 4: Upstream transportation and
distribution
– category 5: Waste generated in operations
– category 6: Business travel
– category 7: Employee commuting
– category 9: Downstream transportation
and distribution.
Social
Employees
Employee data is recognised based on records from the
Group’s ordinary registration systems. The number of
employees is determined as the number of employ-
ees at the end of each month converted to full-time
equivalents (FTEs). Employees who have been made
redundant are recognised until the expiry of their
notice period, regardless of whether they have been
released from all or some of their duties during their
notice period.
‘Gender with the lowest representation (female)’
represents the gender distribution of our senior
directors and above, our people leaders, and the
total workforce in Ørsted.
Employee satisfaction
Ørsted conducts a comprehensive employee satis-
faction survey once a year. With a few exceptions, all
Ørsted employees are invited to participate in the sur-
vey. The following employees are omitted from the sur-
vey results: employees who joined the company shortly
before the employee satisfaction survey, employees
who resigned shortly after the employee satisfaction
survey, interns, consultants, advisers, and external
temporary workers who do not have an employment
contract with Ørsted.
Safety
Occupational injuries are calculated according to op-
erational scope. Data from companies wholly or partly
owned by Ørsted and where Ørsted is responsible for
safety is included. Occupational injuries and lost-time
injuries are calculated for both our own employees and
our contractors. Data from all Ørsted locations are
recognised.
The total recordable injury rate (TRIR) is calculated as
the number of total recordable injuries per one million
hours worked. The number of hours worked is based on
1,667 working hours annually per full-time employee
and monthly records of the number of employees
converted into full-time employees. For suppliers, the
actual number of hours worked is recognised on the
basis of data provided by the suppliers, access control
systems at locations, or estimates.
Fatalities are the number of employees who lost their
lives as a result of a work-related incident.
Governance
Board of Directors of Ørsted A/S
The employee representatives on the Board of
Directors are not included in the data for the Board of
Directors.
Group Executive Team
The Group Executive Team consists of the Executive
Board (our CEO, CFO, and Chief HR Officer) and eight
additional members, who undertake the day-to-day
management of Ørsted.
Substantiated whistle-blower cases
Ørsted’s whistle-blower hotline is available for internal
and external reporting of suspected cases of inappro-
priate or illegal behaviour. Whistle-blower cases are
received and handled by the Internal Audit function,
which also receives similar reports through the man-
agement system and from compliance officers. All
reports are managed in accordance with the guidelines
for the handling of whistle-blower reports approved
by the Audit & Risk Committee, which is ultimately
responsible for the whistle-blower scheme. Only cases
which are closed during the financial year, and which
have been reported to the Audit & Risk Committee as
fully or partially substantiated, are reported.
Cases transferred to the police
Cases transferred to the police are defined as the num-
ber of substantiated whistle-blower cases which have
been transferred to the police.
161 Ørsted annual report 2022
Financial statements Consolidated ESG statements (additional information) | Accounting policies
Parent company
financial statements
163 Income statement
163 Balance sheet
164 Statement of changes in equity
165 Notes
1 Basis of reporting
2 Employee costs
3 Financial income and expenses
4 Tax on profit (loss) for the year and deferred tax
5 Distribution of net profit
6 Property, plant, and equipment
7 Investments in subsidiaries
8 Receivables from subsidiaries
9 Derivatives
10 Securities
11 Loans and borrowings
12 Other provisions
13 Related-party transactions
14 Contingent liabilities
15 Auditor ’s fees
16 Ownership information
Global container logistics giant Maersk will
soon add 12 new ships to its global fleet to be
fuelled by e-methanol produced by Ørsted
using renewable power from onshore wind
and solar PV farms.
This will be the largest ever offtake agreement
for green fuels in the maritime industry, with
around 300,000 tonnes of e-methanol to be
delivered each year from a new power-to-X
facility we’ll build on the US Gulf Coast.
162 Ørsted annual report 2022
Financial statements
Note
Income statement
DKKm 2022 2021
Revenue 229 198
2 Employee costs (82) (62)
External expenses (243) (188)
Operating profit (loss) before
depreciation, amortisation, and
impaiment losses (EBITDA) (96) (52)
Amortisation, depreciation, and
impairment losses on property,
plant, and equipment (112) (111)
Operating profit (loss) (EBIT) (208) (163)
Gain/losses on divestment of
enterprises (224) (1,186)
3 Financial income 23,126 29,420
3 Financial expenses (19,673) (10,967)
Profit (loss) before tax 3,021 17,104
4 Tax on profit (loss) for the year 344 142
5 Profit (loss) for the year 3,365 17,246
Income statement
1 January – 31 December
Balance sheet
1 January – 31 December
Note
Assets
DKKm 2022 2021
6 Land and buildings 712 791
Property, plant, and equipment 712 791
7 Investments in subsidiaries 51,276 36,150
8 Receivables from subsidiaries 163,616 107,894
4 Deferred tax 33 160
Other receivables 14 15
Financial assets 214,939 144,219
Non-current assets 215,651 145,010
Receivables from subsidiaries 28,542 22,097
9 Derivatives 6,661 7,328
Other receivables 2,702 4,289
Income tax 56 -
Receivables 37,961 33,714
10 Securities 24,428 20,417
Cash 8,840 3,169
Current assets 71,229 57,300
Assets 286,880 202,310
Note
Equity and liabilities
DKKm 2022 2021
Share capital 4,204 4,204
Reserves 2,130 573
Retained earnings 46,530 49,411
Proposed dividends 5,675 5,255
Equity attributable to share-
holders in Ørsted A/S 58,539 59,443
11 Hybrid capital 19,793 17,984
Equity 78,332 77,427
12 Other provisions 1,949 1,819
11 Lease liabilities 659 714
11 Bond and bank debt 54,033 25,128
Payables to subsidiaries - 310
Non-current liabilities 56,641 27,971
12 Other provisions 22 99
Lease liabilities 107 121
Bond and bank debt 1,547 19,081
9 Derivatives 5,564 7,523
Trade payables 64 44
Payables to subsidiaries 142,297 68,769
Other payables 2,306 813
Income tax - 462
Current liabilities 151,907 96,912
Liabilities 208,548 124,883
Equity and liabilities 286,880 202,310
163
Ørsted annual report 2022
Financial statements Parent company financial statements | Income statement / Balance sheet
Statement of changes in equity
DKKm Share capital
Hedging
reserve
Retained
earnings
Proposed
dividends
Shareholders
in Ørsted A/S
Hybrid
capital Total
Equity at 1 January 2022 4,204 573 49,411 5,255 59,443 17,984 77,427
Profit (loss) for the year - - 2,788 - 2,788 577 3,365
Dividends paid - - 2 (5,255) (5,253) - (5,253)
Proposed dividends - - (5,675) 5,675 - - -
Value adjustments of hedging instruments - 2,578 - - 2,578 - 2,578
Value adjustments transferred to financial income and expenses - (583) - - (583) - (583)
Tax on changes in equity - (438) - - (438) 13 (425)
Coupon payments, hybrid capital - - - - - (529) (529)
Additions, hybrid capital - - - - - 3,693 3,693
Disposals, hybrid capital - - - - - (1,945) (1,945)
Share-based payments - - 4 - 4 - 4
Changes in equity in 2022 - 1,557 (2,881) 420 (904) 1,809 905
Equity at 31 December 2022 4,204 2,130 46,530 5,675 58,539 19,793 78,332
Equity at 1 January 2021 4,204 43 38,152 4,834 47,233 13,232 60,465
Profit (loss) for the year - - 16,506 - 16,506 740 17,246
Dividends paid - - 4 (4,834) (4,830) - (4,830)
Proposed dividends - - (5,255) 5,255 - - -
Value adjustments of hedging instruments - 643 - - 643 - 643
Value adjustments transferred to financial income and expenses - 33 - - 33 - 33
Tax on changes in equity - (146) - - (146) 86 (60)
Coupon payments, hybrid capital - - - - - (430) (430)
Additions, hybrid capital - - - - - 7,327 7,327
Disposals, hybrid capital - - - - - (2,971) (2,971)
Share-based payments - - 4 - 4 - 4
Changes in equity in 2021 - 530 11,259 421 12,210 4,752 16,962
Equity at 31 December 2021 4,204 573 49,411 5,255 59,443 17,984 77,427
Statement of changes in equity
1 January – 31 December
Share capital com position and dividends are disclosed in
note 5.2 ‘Equity’ to the consolidated financial statements.
Information on trea sury shares is available in the note.
164 Ørsted annual report 2022
Financial statements Parent company financial statements | Statement of changes in equity
1. Basis of reporting
Accounting policies
The parent company financial statements
have been prepared in accordance with the
provisions of the Danish Financial State-
ments Act (‘Årsregnskabsloven’) (reporting
class D).
The Danish Financial Statements Act allows
us to use certain IFRS standards to inter-
pret the act. Therefore, we have previously
implemented IFRS 15 ‘Revenue’ and IFRS 16
‘Leases’.
The accounting policies remain unchanged
from the previous year.
Unless otherwise stated, the financial
statements are presented in Danish kroner
(DKK) rounded to the nearest million.
The parent company accounting policies
are consistent with the accounting policies
described for the consolidated financial
statements, with the following exceptions.
Foreign currency translation
We recognise exchange rate adjustments
of receivables from and payables to sub-
sidiaries as financial income and expenses
in the income statement when the balances
are accounted for as part of the total net
investment in foreign enterprises. Likewise,
we recognise foreign exchange gains and
losses on loans and derivatives in the income
statement as financial income and expenses
when they have been entered into to hedge
the net investment in the foreign enterprises.
Revenue
Rental income comprises income from
commercial leases and is recognised over
the term of the lease. Income from services is
recognised when delivery has taken place.
Dividends from investments
Dividends from subsidiaries and associates
are recognised in the income statement for
the financial year in which the dividends are
approved at the annual general meeting.
If the dividends exceed the total income
after takeover, the dividends are recognised
as a reduction of the cost of the investment
under assets.
Investments
We measure our investments in subsidiaries
and associates at cost. If there is any
indication that the value of a company is
lower than our future earnings in the com-
pany, impairment testing of the company is
carried out as described in the consolidated
financial statements. The carrying amount
is written down to the recoverable amount
whenever the carrying amount exceeds the
future earnings in the company (recoverable
amount).
If we have a legal or constructive obliga-
tion to cover a deficit in subsidiaries and
associates, we recognise a provision for this.
Ta x
Ørsted A/S is taxed jointly with its Danish
subsidiaries. The jointly taxed companies are
part of joint taxation with the parent compa-
ny as the management company.
Subsidiaries are included in the joint taxa-
tion from the date they are consolidated in
the consolidated financial statements and
up to the date on which they are no longer
consolidated.
Current tax for 2022 is recognised by the
individual, jointly taxed companies.
Statement of cash flows
We do not prepare a separate statement of
cash flows for the parent company. Refer-
ence is made to the consolidated statement
of cash flows on pages 75-76.
Key accounting estimate
In connection with the preparation of
the financial statements, a number of
accounting estimates have been made
that affect the profit (loss) and balance
sheet. Estimates are regularly reassessed
by the leadership team on the basis of
historical experience and other relevant
factors.
Impairment test
If there is any indication that the carrying
amount is lower than our future earnings
in a company, we test for impairment as
described in the consolidated financial
statements. The future earnings of the
company (recoverable amount) are
calculated based on assumptions con-
cerning significant estimates.
165 Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 1. Basis of reporting
2. Employee costs 3. Financial income and expenses
Notes 2.7 ‘Employee costs’ and 2.8 ‘Share-
based payment’ to the consoli dated
financial statements describe the remuner-
ation of the Executive Board and the Board
of Directors as well as the share-based
payment, termination, and bonus scheme
for the Executive Board and details on the
remuneration of the Board of Directors.
The parent company had an average of eight
employees in 2022 (2021: six employees).
Remuneration of the Board of Directors
totals DKK 7 million (2021: DKK 6 million).
Employee costs
DKKm 2022 2021
Wages and salaries 70 50
Share-based payment 4 4
Pensions and social costs 1 2
Remuneration 7 6
Total employee costs 82 62
Salaries and remuneration of the Executive Board
DKK ’000
Fixed salary 30,632 31,250
Cash-based incentive scheme 6,454 6,996
Share-based payment 3,989 2,497
Pension, incl. social security and benefits 860 709
Salary in notice period 14,553 -
Severance payment 9,270 -
To ta l 65,758 41,452
Financial income and expenses
DKKm 2022 2021
Interest income from cash, etc. 104 116
Interest income from subsidiaries 4,006 2,016
Interest income from securities at market value 150 174
Reversal impairment of investments in subsidiaries 165 4,536
Foreign exchange gains 3,531 4,604
Value adjustments of derivatives 11,109 5,872
Dividends received 4,061 12,102
Total financial income 23,126 29,420
Interest expenses relating to loans and borrowings (1,824) (1,542)
Interest expenses, leases (20) (23)
Interest expenses to subsidiaries (765) (12)
Impairment of investments in subsidiaries (39) (194)
Capital losses on securities at market value (1,574) (500)
Foreign exchange losses (5,664) (1,585)
Value adjustments of derivatives (9,592) (7,037)
Other financial expenses (195) (74)
Total financial expenses (19,673) (10,967)
Net financial income and expenses 3,453 18,453
166
Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 2. Employee costs / 3. Financial income and expenses
4. Tax on profit (loss) for the year and deferred tax 5. Distribution of net profit
Income tax
DKKm 2022 2021
Tax on profit (loss) for the year 344 142
Tax on changes in equity (425) (60)
Total tax for the year (81) 82
Tax on profit (loss) for the year can be broken down as follows:
Current tax 470 (114)
Adjustments to deferred tax (170) 280
Adjustments to current tax in respect of prior years 1 (23)
Adjustments to deferred tax in respect of prior years 43 (1)
Tax on profit (loss) for the year 344 142
Development in deferred tax
DKKm
Deferred tax at 1 January (160) 119
Adjustments for the year recognised in profit (loss) for the year 170 (280)
Adjustments to deferred tax in respect of prior years (43) 1
Deferred tax at 31 December (33) (160)
Specification of deferred tax
DKKm
Non-current liabilities (33) (160)
Deferred tax, asset 33 160
Deferred tax, liability - -
Distribution of net profit
DKKm 2022 2021
Profit (loss) for the year is attributable to:
Shareholders in Ørsted A/S, proposed dividends for the financial year 5,675 5,255
Shareholders in Ørsted A/S, retained earnings (2,887) 11,251
Interest payments and costs, hybrid capital owners of Ørsted A/S 577 740
Profit (loss) for the year 3,365 17,246
167
Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 4. Tax on profit (loss) for the year and deferred tax / 5. Distribution of net profit
6. Property, plant, and equipment 7. Investments in subsidiaries
We have entered into leases for office
premises, primarily in Gentofte, Denmark
(expiring in 2028).
We have entered into operating leases with
subsidiaries for sublease of office premises.
In 2022, an amount of DKK 95 million was
recognised (2021: DKK 83 million) in profit
(loss) for the year in respect of rental income.
We have tested investments in subsidiaries
for impairment by comparing the expected
future income from the individual subsidiar-
ies with their carrying amounts.
The impairment test in 2022 gave rise to a
reversal of impairment on the investment
in Ørsted Bioenergy & Thermal Power A/S
of DKK 124 million and on the investment
in Ørsted Onshore Holding A/S of DKK 41
million.
An impairment of DKK 39 million is recog-
nised on the investment in Orsted Infrastruc-
ture GmBh, resulting in a net reversal of
impairment of DKK 126 million based on the
individual subsidiaries recoverable amounts.
In 2022, the addition relates to capital injec-
tions in Ørsted Salg & Service A/S.
Property, plant, and equipment: Land and buildings
DKKm 2022 2021
Cost at 1 January 1,120 1,113
Additions 33 7
Disposals - -
Cost at 31 December 1,153 1,120
Depreciation and amortisation at 1 January (329) (219)
Depreciation and amortisation (112) (110)
Disposals - -
Depreciation and amortisation at 31 December (441) (329)
Carrying amount at 31 December 712 791
Value of leased assets 712 791
Investments in subsidiaries
DKKm 2022 2021
Cost at 1 January 36,809 32,279
Additions 15,000 4,530
Disposals - -
Cost at 31 December 51,809 36,809
Value adjustments at 1 January (659) (3,501)
Impairment losses/reversals 126 2,842
Value adjustments at 31 December (533) (659)
Carrying amount at 31 December 51,276 36,150
Note 7.4 Company overview of the consolidated financial
statements contains a overview of subsidiaries, etc.
168 Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 6. Property, plant, and equipment / 7. Investments in subsidiaries
8. Receivables from subsidiaries 9. Derivatives
Ørsted A/S has assumed the subsidiaries’
currency risks via forward exchange
contracts, which have subsequently been
hedged in the market. Furthermore, hedging
contracts have been concluded to hedge
the currency risk associated with invest-
ments in subsidiaries in foreign currencies.
We have also entered into a number of
interest rate swaps to manage our interest
rate risk.
The company has fair value hedged loans
and receivables in GBP and USD. The value
of the fair value hedge offset in the income
statement amounted to DKK -879 million
(2021: DKK 127 million).
Derivatives at the end of December 2022
mature as follows: 2023: DKK -651 million,
2024: DKK 89 million, after 2024: DKK 1,659
million (2021: 2022: DKK -279 million, 2023:
DKK -587 million, after 2023: DKK 671
million).
All derivatives are classified as based on
observable inputs in the fair value hierarchy.
Non-current receivables from subsidiaries
DKKm 2022 2021
Cost at 1 January 107,894 80,893
Additions 84,638 69,141
Disposals (28,916) (42,140)
Cost at 31 December 163,616 107,894
See note 6.1 ‘Market risk policy’ to the consolidated financial statements and
the management’s review on pages 38-41 for more details on risk and risk
management.
Overview of
derivative positions
DKKm
2022 2021
Contractual
principal amount Market value
Contractual
principal amount Market value
Interest derivatives 22,185 1,578 21,223 752
Currency derivatives 47,318 (481) 58,384 (947)
To ta l 69,503 1,097 79,607 (195)
Assets 6,661 7,328
Equity and liabilities (5,564) (7,523)
169
Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 8. Receivables from subsidiaries / 9. Derivatives
10. Securities
11. Loans and borrowings
12. Other provisions
Securities are a key element in our financial
resources, and therefore investments are
primarily made in liquid AAA-rated Danish
mortgage bonds and, to a lesser extent, in
other bonds. Most of the securities qualify
for repo transactions in the Danish central
bank, ‘Danmarks Nationalbank’.
All securities are classified as based on
observable inputs in the fair value hierarchy.
On 31 December 2022, we had issued hybrid
capital with a total notional amount of
DKK 19,877 million (2021: DKK 18,269 million).
The hybrid bonds have a 1,000-year term
and expire as follows: DKK 681 million in
3013, DKK 3,668 million in 3017, DKK 4,416
million in 3019, DKK 7,336 million in 3021,
and DKK 3,692 million in 3022, respectively.
The long-term portion of lease debt
amounted to DKK 659 million at 31 Decem-
ber 2022 (2021: DKK 714 million), of which
DKK 208 million (2021: DKK 322 million) fall
due in more than five years.
The long-term portion of bank loans and
issued bonds amounted to DKK 54,033 mil-
lion at 31 December 2022 (2021: DKK 25,128
million), of which DKK 50,930 million (2021:
DKK 24,781 million) fall due in more than
five years.
We have made provisions for non-current
liabilities totalling DKK 1,971 million (2021:
DKK 1,918 million), of which DKK 22 million
fall due within 1 year, and DKK 1,949 million
fall due in 1-5 years.
The provisions mainly concern the divest-
ment of our oil and gas business in 2017 and
the sale of our Danish power distribution,
residential customer, and city light businesses
to SEAS-NVE (now Andel) in 2020.
Securities
DKKm 2022 2021
Securities, available
for use 24,428 20,417
Total securities 24,428 20,417
13. Related-party transactions
Related parties are the Board of Directors,
the Executive Board, Ørsted A/S’s subsidiaries,
and the Danish state.
Remuneration of the Board of Directors and
the Executive Board is disclosed in notes
2.7 ‘Employee costs’ and 2.8 ‘Share-based
payment’ in the consolidated financial
statements.
Our related-party transactions are made
on arm’s length terms.
170 Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 10. Securities / 11. Loans and borrowings / 12. Other provisions / 13. Related-party transactions
15. Auditor’s fees
16. Ownership information
Auditor’s fees
DKKm 2022 2021
Statutory audit 4 3
Other assurance engangements 3 -
Total fees to PwC 7 3
Ownership information
31 December 2022 Registered office
Ownership
interests
Voting
share
The Danish state represented by
the Danish Ministry of Finance Copenhagen K, Denmark 50.12 % 50.74 %
Andel A.M.B.A. Svinninge, Denmark 5.01 % 5.07 %
The Capital Group Companies, Inc. Los Angeles, the US - 5-10 %
1
The table shows the shareholders with ownership interests and voting shares of
at least 5 %. The difference between ownership interests and voting shares arises
when power of attorney is issued.
1 Interval shown, as precise voting share is not publicly available.
14. Contingent liabilities
Guarantees
Ørsted A/S has provided guarantees in
connection with participation by subsidiaries
and subsidiaries’ joint operations and joint
ventures in the construction and operation
of offshore wind farms and natural gas in-
stallations as well as guarantees in respect
of leases, energy trading activities, purchase,
sale, and supply agreements, decommission-
ing obligations, farm-downs and other M&A
transactions as well as secondary liability
on decommissioning of offshore installations
related to the divestment of the oil and gas
business, etc.
Ørsted A/S acts as guarantor or surety
provider with primary liability for bank
liabilities in certain subsidiaries, including
guarantees in favour of banks and investors
covering credit facilities established and
bonds issued in Taiwan.
Furthermore, in support of the ratings of
Ørsted Salg & Service A/S by Moody’s and
Ørsted Wind Power TW Holding A/S by
Taiwan Ratings, Ørsted A/S has provided
general guarantees covering all obligations
and liabilities undertaken in the ordinary
course of business by these two entities.
Indemnities
Ørsted A/S is taxed jointly with the Danish
companies in the Ørsted Group. As manage-
ment company, Ørsted A/S has unlimited as
well as joint and several liability together
with the other jointly taxed companies for
Danish income taxes and withholding taxes
on dividends, interest, and royalties related
to the jointly taxed companies.
Litigation
Ørsted is involved in ongoing transfer pricing
disputes. For further information, we refer to
section 4.1 ‘Approach to taxes’ to the con-
solidated financial statements. Ørsted A/S
is not a party to any litigation proceedings
or legal disputes that could have an effect
on the company’s financial position, either
individually or collectively.
In 2022 work in respect of issuances of
bonds was performed, this is captured
under other assurance engagements.
171 Ørsted annual report 2022
Financial statements Parent company financial statements | Notes | 14. Contingent liabilities / 15. Auditor’s fees / 16. Ownership information
Management’s statement,
auditor’s reports, and glossary
173 Statement by the Executive Board and the Board of Directors
174 Independent Auditor’s Reports
179 Independent limited assurance report on the consolidated ESG statements
181 Glossary
In an ambitious new project, we have partnered
with the Lincolnshire and Yorkshire Wildlife
Trusts to restore biodiversity around the
Humber, a large tidal estuary on the east coast
of Northern England.
The pioneering initiative will seek to restore
seagrass and salt marsh and introduce half a
million native oysters to improve the health and
resilience of the estuary’s ecosystem.
172 Ørsted annual report 2022
Financial statements
Statement by the Executive Board
and the Board of Directors
Board of Directors:
Executive Board:
* Employee elected board member
173 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Statement by the Executive Board and the Board of Directors
Independent Auditor’s Reports
Report on the audit of the
Financial Statements
Our opinion
Basis for opinion
Key audit matters
174 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent auditor’s reports
175 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent auditor’s reports
176 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent auditor’s reports
Statement on Management’s Review
Management’s responsibilities for the
Auditor’s responsibilities for the audit of the
177 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent auditor’s reports
Report on compliance with
the ESEF Regulation
CVR No 3 3 7 7 12 31
178 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent auditor’s reports
Independent limited assurance report
on the consolidated ESG statements
To the stakeholders of Ørsted A/S
Ørsted A/S engaged us to provide limited
assurance on the consolidated ESG state-
ments stated on pages 155-161 in the 2022
annual report of Ørsted A/S for the period
1 January – 31 December 2022.
Our conclusion
Based on the procedures we performed and
the evidence we obtained, nothing came to
our attention that causes us not to believe
that the consolidated ESG statements in
the 2022 annual report of Ørsted A/S are
prepared, in all material respects, in accord-
ance with the applied accounting policies
developed by Ørsted A/S as stated on pages
156-161.
This conclusion is to be read in the context
of what we state in the remainder of our
report.
What we are assuring
The scope of our work was limited to
assurance over data in the consolidated
ESG statements in the 2022 annual report.
Regarding reporting on Art. 8 of the
Taxonomy Regulation, we are assuring
that data have been stated in accordance
with the applied accounting policies, not
compliance with the EU regulation, since
reporting requirements are still open to
interpretations.
We express limited assurance in our
conclusion.
Professional standards applied and level
of assurance
We performed a limited assurance engage-
ment in accordance with International
Standard on Assurance Engagements 3000
(Revised) ‘Assurance Engagements other
than Audits and Reviews of Historical
Financial Information’ and, in respect of the
greenhouse gas emissions, in accordance
with International Standard on Assurance
Engagements 3410 ‘Assurance engagements
on greenhouse gas statements’. The quanti-
fication of greenhouse gas emissions is
subject to inherent uncertainty because of
incomplete scientific knowledge used to
determine the emissions factors and the
values needed to combine emissions of
different gasses.
A limited assurance engagement is sub-
stantially less in scope than a reasonable
assurance engagement in relation to both
the risk assessment procedures, including
an understanding of internal control, and
the procedures performed in response to
the assessed risks; consequently, the level
of assurance obtained in a limited assurance
engagement is substantially lower than the
assurance that would have been obtained
had a reasonable assurance engagement
been performed.
Our independence and quality control
We have complied with the independence
requirements and other ethical requirements
in the International Ethics Standards Board
for Accountants’ International Code of Ethics
for Professional Accountants (IESBA Code),
which is founded on fundamental principles
of integrity, objectivity, professional com-
petence and due care, confidentiality and
professional behavior, and ethical require-
ments applicable in Denmark.
PricewaterhouseCoopers applies Interna-
tional Standard on Quality Management
1, ISQM 1, which requires the firm to design,
implement, and operate a system of quality
management, including policies or proce-
dures regarding compliance with ethical
requirements, professional standards, and
applicable legal and regulatory require-
ments. Our work was carried out by an
independent multidisciplinary team with
experience in sustainability reporting and
assurance.
Understanding reporting and measurement
methodologies
The consolidated ESG statements need to
be read and understood together with the
accounting policies. The accounting policies
used for the preparation of the consolidated
ESG statements are the applied accounting
policies developed by Ørsted A/S, which
Management is solely responsible for select-
ing and applying.
The absence of a significant body of estab-
lished practice on which to draw to evaluate
and measure ESG data allows for different,
but acceptable, measurement techniques
and can affect comparability between
entities and over time.
Work performed
We are required to plan and perform our
work in order to consider the risk of mate-
rial misstatement of the consolidated ESG
statements. In doing so and based on our
professional judgement, we:
– made inquiries and conducted interviews
with Group functions to assess consoli-
dation processes, use of company-wide
systems, and controls performed at
Group level
179 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent limited assurance report on the consolidated ESG statements
– checked ESG data on a sample basis to
underlying documentation and evalu-
ated the appropriateness of quantifica-
tion methods and compliance with the
accounting policies for preparing the
consolidated ESG statements
– conducted an analytical review of the
data and trend explanations submitted
by all business units for consolidation at
Group level
– considered the disclosure and presenta-
tion of the consolidated ESG statements
– evaluated the obtained evidence.
Management’s responsibilities
Management of Ørsted A/S is responsible for:
– designing, implementing, and maintaining
internal control over information relevant
to the preparation of the consolidated
ESG statements that are free from mate-
rial misstatement, whether due to fraud
or error
– establishing objective accounting policies
for preparing the consolidated ESG
statements
– measuring and reporting the information
in the consolidated ESG statements
based on the accounting policies
– the content of the consolidated ESG
statements.
Our responsibility
We are responsible for:
– planning and performing the engage-
ment to obtain limited assurance about
whether the consolidated ESG state-
ments for the 1 January – 31 December
2022 are prepared, in all material
respects, in accordance with the account-
ing policies
– forming an independent conclusion,
based on the procedures performed and
the evidence obtained
– reporting our conclusion to the
stakeholders of Ørsted A/S.
Hellerup, 1 February 2023
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR no. 3377 1231
Rasmus Friis Jørgensen
State Authorised Public Accountant
mne28705
Anders Stig Lauritsen
State Authorised Public Accountant
mne32800
180 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Independent limited assurance report on the consolidated ESG statements
Glossary
Availability
Availability is calculated as the ratio of actual produc-
tion to the possible production, which is the sum of lost
production and actual production in a given period.
The production-based availability (PBA) is impacted
by grid and wind turbine outages, which are technical
production losses. PBA is not impacted by market
requested shutdowns and wind farm curtailments, as
this is deemed not to be reflective of site performance,
but due to external factors.
Avoided emissions
The amount other sources of energy would have
emitted if we had not generated energy from renew-
able sources.
Awarded capacity
Offshore capacity that we have been awarded in
auctions and tenders, but where we have yet to sign
a PPA and take final investment decision.
Blockage effect
The blockage effect arises from the wind slowing
down as it approaches the wind turbines.
BSUoS tariffs
Costs related to the day-to-day operation of the trans-
mission system imposed on generators and suppliers.
Carbon emission allowances
Carbon emission allowances subject to the European
Union Emissions Trading Scheme (EU ETS).
CfD
A contract for difference is a subsidy that guarantees
the difference between the market reference price and
the exercise price won.
CHP
A combined heat and power plant (CHP) generates
both heat and power in the same process.
Commissioning/COD
When our assets are in oper ation, and the legal liability
has been transferred from the supplier to us.
Contracted capacity
Onshore capacity where we have signed PPAs covering
more than 50 % of the asset’s capacity, but where we
have not yet taken final investment decision.
Decided (FID) and installed capacity
Installed generation capacity plus capacity for assets
where a final investment decision has been made.
Degree days
Number of degrees in absolute figures in difference
between the average temperature and the official
Danish indoor temperature of 17 °C.
EPC
Engineering, procurement, and construction. The part
of our business which handles the construction and
installation of assets.
FID
Final investment decision. When the Board of Directors
approves major investments for construction assets.
Generation capacity
Ørsted’s ownership of the asset. Offshore wind turbines
are included when each turbine has passed the
240-hour test. Onshore capacities are included after
COD of the entire asset.
Green certificates
Certificate awarded to producers of environ-
ment-friendly power as a supplement to the market
price of power in the given price area.
Green dark spread (GDS)
Represents the contribution margin per MWh of power
generated at a coal-fired CHP plant with a given
efficiency. It is determined as the difference between
the market price of power and the cost of the coal
(including associated freight costs) and carbon emis-
sion allowances used to generate the power.
Ineffective hedges
When we hedge our exposure with an instrument that
is not 100 % correlated with the exposure, we may see
ineffectiveness in our hedging (i.e. results from such
hedges should be recognised in the P&L immediately).
Installed capacity
Installed capacity where the asset has been completed
and has passed a final test.
Investment tax credits (ITCs)
Federal tax credit based on qualifying renewable
investment costs.
Load factor
The ratio between the actual power generation in a
given period relative to the potential generation which
is possible by continuously exploiting the maximum
capacity over the same period.
Offshore transmission assets
Connect offshore generation to the onshore grid and
typically include the offshore power transmission
infrastructure, an onshore substation, and the electrical
equipment relating to the operation of the substation.
O&M
Operations and maintenance. The part of our business
that operates and maintains our assets after installation.
Overhedging
When our hedged volumes are higher than our actual
generation, we are overhedged. This is normally caused
by lower wind speeds and lead to financial losses if
market prices are above our hedged prices.
P2X
Renewable hydrogen and e-fuels, collectively referred
to as Power-to-X (P2X).
Partnership income
Income originating from our partners’ purchase of
ownership interests in the offshore wind farms. Includes
both the gain in connection with the farm-down and
the subsequent construction of the wind farm.
Power purchase agreement (PPA)
An agreement between us and a buyer/seller to
purchase/sell the power we generate, which includes
all commercial terms (price, delivery, volumes, etc.).
Production tax credit (PTC)
Federal tax credit based on eligible power generation
in the US.
ROCs
Renewable obligation certificates issued by Ofgem in
the UK to operators of accredited generating stations
for the eligible renewable energy they generate.
Operators can trade ROCs with other parties.
Tax equity
An arrangement where an investor obtains rights to
federal tax credits and other tax attributes in exchange
for a cash contribution.
TEC
Transmission entry capacity (TEC) defines a generator’s
maximum contractual level of transmission access
in MW.
TNUoS tariffs
Costs related to the use of the transmission networks
in the UK based on TEC.
TRIR
In addition to lost-time injuries, the total recordable
injury rate (TRIR) also includes injuries where the injured
person is able to perform restricted work the day after
the accident as well as accidents where the injured
person has received medical treatment.
Wake effect
Wake within wind farms and between neighbouring
wind farms. There is a wake after each wind turbine
where the wind slows down. As the wind flow continues,
the wake spreads, and the wind speed recovers.
Wind speed
Shows the wind speed at Ørsted’s wind farms.
The wind measurements are weighted on the basis
of our generation capacity and can be compared
to a normal wind period.
181 Ørsted annual report 2022
Financial statements Management’s statement, auditor’s reports, and glossary | Glossary
Tel.: +45 99 55 11 11
CVR no. 36213728
Group Communication
Martin Barlebo
Tel.: +45 99 55 95 52
Investor Relations
Rasmus Keglberg Hærvig
Tel.: +45 99 55 90 95
Design and layout
e-Types with Ørsted Global Design
Images
Cover, Patrick Harrison,
Anholt Offshore Wind Farm, Denmark
Patrick Harrison (page 4, 55, 155)
Jan Oelker (page 12)
Sally Anscombe (page 42)
Martin Juul (page 65)
Hamza Alghamdi (page 69)
Christian E. Rørbeck (page 162)
Finn Varney for Yorkshire Wildlife Trust (page 172)
All other images by Ørsted
Publication
1 February 2023