Ørsted has transformed itself from a fossil fuel giant into a green energy leader. What does it take to go from a major emitter to a renewables pioneer?
We have everything to gain from the green transition: cleaner air, sustainable growth, and, most importantly, the chance at a livable future. Yet for many energy companies, it also stirs an existential fear of extinction.
Oil and gas companies have droves of workers who have spent decades building expertise, networks and careers around fossil fuels. While they may recognize the importance – and inevitability – of a green transition, it can be cold comfort when faced with the prospect of losing the jobs and identities they have spent years building.
Yet one company’s remarkable transformation shows that radical change, when guided by vision, communication and commitment, is not only possible, but the route to long-term success. That company is Ørsted.
At the turn of the century, Ørsted was one of Europe’s largest corporate carbon emitters, an energy company with operations focused on Denmark’s huge reserves of oil and natural gas. Today, the company is a living example of the green transition in action, with a 98% reduction in its carbon intensity from scope 1 and 2 since 2006 and an energy portfolio that is now 99% renewable.
How did Ørsted manage to rewrite its corporate DNA? Through a combination of science-based targets, clear policy alignment, and long-term planning, supported by investment in people and communities. Ørsted’s journey illustrates that the transition to renewables need not mean economic decline, but rather, a reimagining of prosperity in a decarbonized world.
Ørsted’s transformation began in 2008, when senior management saw a bright future for renewables. Though the business was still thriving, it was clear that fossil fuels were incompatible with a sustainable future, and had an expiry date.
Ørsted set a course to shift the business from fossil fuels to renewable energy, resisting internal and external pushback from both employees and stakeholders who were proud of the company’s long and successful history in fossil fuels, and confronting a long – and costly – transition process.
Buildings in the favela were tightly packed together, irregularly spread and constructed of wood, making them too fragile or too constricted to support solar panels, much less a new power plant. EDP was limited in building new power centers or installing new technology.
But Brazil’s decentralized energy system, which allows remote power plants to power distant areas, provided a unique opportunity. Using a 75 kW micro solar plant that sat 100 km away, EDP realized they could channel renewable power into the favela’s existing grid, at no cost to residents. The project could lower residents’ electricity bills by delivering solar energy through a crediting system, making clean power accessible without any upfront costs and giving beneficiaries immediate savings to put towards food, healthcare or education. The most exciting part of the idea? If it was successful, Favela dos Sonhos would be only the beginning: the project would be a template that could be replicated in communities nationwide.
And then we achieved significant progress for offshore wind through strong collaboration with ambitious governments that set targets for renewables and offshore wind, which incentivised the industry to invest and scale the technology..”
By 2017, the company had set its first SBTi (Science Based Targets Initiative) for scope 1-2, covering those direct and indirect emissions over which it has control. There was also a pledge to phase out coal from all its operations and a new purpose-driven company vision to help create a world that runs entirely on green energy. Four years later, and Ørsted became the first energy company to set a SBTi that took in scope 3 emissions too, and so covering its full full-value chain.
In practice, this has brought change across almost every department. Procurement departments purchased green electricity certificates to cover Ørsted’s full operations, senior management took a strategic decision to divest the upstream oil and gas business, and the facility management department moved to make electric vehicles the norm. But it’s the pioneering work in offshore wind that proved the backbone of Ørsted’s switch and the basis for its future sustainable growth.
It also meant a degree of determination in the face of setbacks, which were not uncommon during their transition. Weathering challenges, refining approaches based on learnings and keeping in constant contact with stakeholders were all uncomfortable, but key to success.
Globally, Ørsted now has 10.2 GW of operational offshore wind capacity, with a further 8.1 GW under construction across Europe, North America, and Asia-Pacific. Where it’s deployed, it’s estimated that emissions are cut by 98-99% compared to fossil fuels.
Progress hasn’t just been in quarterly reports, but in communities. Ørsted is breathing new life in towns where it operates, like Grimsby, a port town in northern England. Grimsby is now home to Ørsted’s East Coast Hub, creating local employment for over 600 people. The figures are even more impressive nationwide, with the UK’s current offshore wind workforce set to triple to 100,000 people by the end of the decade.
Offshore wind also attracts billions in international investment, creating industrial clusters, often based around a region’s manufacturing heritage. On the UK’s east coast, for example, where steel was once king, specialist companies and fabricators are emerging to take advantage of new markets, such as manufacturing monopiles: the vast structures that anchor wind turbines to the sea-bed.
These jobs call for new skills, too. Ørsted is helping workers move over from declining sectors into renewables, as well as supporting those starting a new career, with apprenticeships that offer the chance to join long-term projects that offer real job security.
While its success seems inevitable in hindsight, Ørsted’s journey to its leading position today called for conviction, strong vision, open communication, bold investment and, above all, a determination to work towards long-term survival, not short-term success.
The company is reaping the benefits of its foresight, as energy security, grid reliability and cutting imports of fossil fuels are rising on the agendas for most governments.
“Offshore wind is delivering now and helping countries such as the UK to create more resilient, independent energy systems,” says Ida. “It’s proven, it’s scalable, and is already cutting emissions. And we can see that our approach to sustainability – through creating positive community impact, prioritising nature preservation, and delivering on decarbonisation – creates value for both our planet, society around us, and improves our resilience as a company.
Increasingly, companies worldwide are now seeing what Ørsted saw more than a decade ago: the future, collective and corporate alike, lies in shifting to renewables. Ida hopes these leaders will find inspiration in Ørsted’s journey.
