Ørsted CEO Change, Shell Leaves Atlantic Shores

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