How a Danish wind company caught the ire of Donald Trump and took a $4 billion write-off in its ‘biggest pain point’—the U.S.

In the realm of things that get under Donald Trump's skin, a Danish wind company worth about $19 billion probably wasn't topping the list.

But after canceling two of its three windfarm projects in New Jersey in October at a $4 billion write-off, Orsted has found itself at the center of a political and economic battle—and on the end of a missive from Trump—over offshore wind in the States.

Speaking on a November earnings call, Orsted’s CEO Mads Nipper didn’t hold back in airing the company’s frustrations in the States, saying the group’s goal was “to de-risk the most painful part of our portfolio, and that is the U.S.”

Following executive exits, Orsted’s future in the U.S., and the viability of several offshore wind projects in the country, both look highly uncertain.

What’s happening at Orsted?

Orsted's decision to abandon its Ocean Wind I and II projects in southern New Jersey stems from a myriad of challenges, primarily driven by shifting economic dynamics that have upended assumptions made several years ago.

Rising interest rates have inflated costs, and complications in the supply chain have caused project delays, placing developers like Orsted in an economic quandary. Profits are plummeting on projects initiated years ago under different financial expectations.

For Orsted in the U.S., supply chain bottlenecks, escalating input expenses, and higher interest rates have been particularly pronounced. According to Senior White House advisor John Podesta, early projects like Orsted’s have become 25% more expensive in the U.S. compared with Europe.

Orsted's current valuation is a fifth of the $93.6 billion peak it achieved in January 2021, when interest rates were low, and demand for renewable energy was high. The company is now worth half as much as it was just six months ago.

Deutsche Bank analyst Gael de-Bray noted in a November briefing that despite previous optimism, the U.S. wind energy sector is encountering delays and additional costs, casting a negative shadow across the industry.

Following the impairment, Orsted underwent a partial overhaul. On Tuesday, the company announced the departure of its chief finance officer, Daniel Lerup, and chief operating officer, Richard Hunter. CEO Mads Nipper cited the need for "new and different capabilities" for the company's continued growth.

Despite Nipper's assertion that the partial U.S. exit has de-risked the company's most challenging portfolio segment, Jefferies equity analyst Ahmed Farman expressed concerns about a funding gap facing Orsted.

While Orsted's challenges are significant, they seem to unveil broader issues in the offshore wind sector. General Electric CEO Larry Crisp projected a $1 billion loss on its offshore wind operations this year, with a similar loss expected in 2024.

Olivia Burke, a senior manager at renewable energy adviser the Carbon Trust, explained that the increase in the size of wind turbines in recent years has contributed to slowdowns. While reducing the cost of each turbine, the need for larger production and shipping methods has strained the supply chain at various levels.

The lengthy intervals between project application and construction in the U.S. also leave developers with little certainty about potential cost increases when they eventually enter the supply chain.

'Trump is a wildcard': Why things could get worse

Despite these challenges, offshore wind remains a vital pillar of the U.S.’s energy strategy, at least under Joe Biden.

The U.S. President made offshore wind and other renewables a key pillar of his Inflation Reduction Act in 2022. Tax breaks for renewable companies were so generous that the EU accused the U.S. of discriminating against companies in the bloc.

However, the Danish giant and other wind companies face another daunting headache in the U.S.: the Republican Party.

The reception among some members of the GOP to Orsted’s pull-out from New Jersey could only be described as jubilant.

The withdrawal even caught the attention of Presidential hopeful Trump, who praised New Jersey congressman Jeff Van Drew for his years of campaigning against wind farms in the State.

“This monstrosity required massive government subsidies, and ultimately, just didn’t work,” Trump wrote of the canceled Orsted projects on his social media platform Truth Social.

Trump’s ire was less likely directed at Orsted and more at wind energy in general, which makes up a pillar of the renewable energy drive to which the right has been actively hostile.

In September the former President claimed that offshore wind was driving the local whale population “crazy,” adding that dead whales were washing up on shore “on a weekly basis” as part of the projects. There is currently no evidence linking the death of whales to wind turbines, according to the National Oceanic and Atmospheric Administration (NOAA).

"Former President Trump is a wildcard. He doesn't like wind power, but he is unlikely to do much to unpick the IRA incentives," said Jonathan Robinson, head of global energy & power research at Frost & Sullivan. "But if he appoints someone hostile to wind power into key government positions, it could be that they delay offshore wind projects via regulation somehow."

The battle has led to what Joseph Webster, a senior fellow at the Atlantic Council, calls a unique politicization of offshore wind energy.

A May survey found that 53% of Democrats in New Jersey supported the development of offshore wind in the States, while 62% of Republicans opposed it. Republicans were also found to be swayed by unfound claims over whale deaths.

“The politicization of offshore wind is neither desirable nor inevitable. Ultimately driving down offshore wind costs is the surest way to make the technology more acceptable across the political spectrum,” Webster wrote in August.

Orsted will have wanted to avoid becoming the sacrificial lamb in the right’s latest rampage against the offshore wind sector.

But if Trump—who is the favorite to take on Biden in 2024 and is polling ahead of the President in several swing states—wins back the White House, those battles only look likely to intensify for the sector.

This story was originally featured on Fortune.com