Orsome

Image source: Joe Woods @woods - Unsplash OKAWA PHOTO, Macrovector - Shutterstock

What's going on?

Denmarks Orsted wants to be the jolly green giant: the power firm on Wednesday revealed a $57 billion bid to become the worlds single largest producer of renewable energy.

What does this mean?

Orsted formerly known as DONG Energy is already the planets biggest builder of offshore sea-based wind farms. But the firm from the home of two famous Hans Christians is now looking to extend that lead while expanding its presence in other areas such as solar and onshore wind.

The increased $57 billion spending plan pledges to make Orsted the worlds largest renewable power provider by 2030 but itll have to fend off some stiff competition. Spains Iberdrola has earmarked $183 billion to achieve the exact same ambition, while Italys Enel unveiled plans last year to roughly triple its renewable capacity in the same timeframe as part of a $195 billion investment plan which could lead to it taking the low-carbon laurels instead.

Why should I care?

For markets: Blow me down.
Orsteds share price actually fell by more than 5% following its announcement. That might be because it highlights just how crowded the renewable energy industry has become: besides specialist producers, oil and gas companies are also rapidly pivoting to green power production. The risk is that the battle for growth comes at the expense of profit, with heavy competition driving down returns for everyone involved.

The bigger picture: Green is the new black.
Despite the prospect of lower profit from renewable energy projects, dont expect historically oil-and-gas-focused firms to hold back on their spending. The International Energy Agency says such companies still arent doing enough to cut emissions and limit irreversible climate change. Its pressuring them to speed up the pace of the renewable transition and quadruple their levels of environmentally friendly investment in the coming years or else.

Originally posted as part of the Finimize daily email.

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