Ørsted replaces Mads Nipper as CEO

Mads Nipper will step down as CEO and group president of Ørsted (CPH: ORSTED) on 1 February 2025.

The Danish renewables group’s board of directors has appointed Rasmus Errboe, currently serving as deputy CEO and chief commercial officer, to replace Nipper.

Nipper, 58, spent over two decades at LEGO Group, including as chief marketing officer from 2011 to 2014. He moved onto pump manufacturer Grundfos before he joined Orsted as its CEO in December 2020.

The end of his four-year tenure comes ahead of Ørsted publishing its annual report for 2024 next week on 6 February 2025.

Chair of Ørsted’s board of directors Lene Skole said: “The renewable energy market has fundamentally changed since January 2021. The impacts on our business of the increasingly challenging situation in the offshore wind industry, ranging from supply chain bottlenecks, interest rate increases, to a changing regulatory landscape, mean that our focus has shifted.

“Therefore, the board has today agreed with Mads Nipper that it’s the right time for him to step down and the board has appointed Rasmus Errboe to take over as CEO.”

Ørsted troubles

It hasn’t been an easy couple of years for Ørsted. Between rising raw material and capital costs in the wake of the Covid pandemic and Russian invasion of Ukraine, the company announced in late 2023 that it had been hit with 28.4 billion Danish kroner (£3.1b) of impairments.

This was driven largely by worsening economics at its US portfolio, which saw the company abandon development of its Ocean Wind 1 and 2 projects, accounting for 19.9b kroner (£2.2b) of the impairments.

These challenges were hardly Ørsted’s alone, with other developers finding that rising prices meant previously struck deals were no longer enough to finance projects.

But Nipper was under pressure to return the company to an even track, vowing to “fight with everything I’ve got” to restore investor confidence.

Mid-2024 saw Ørsted hit with another 3.9b kroner (£436m) over delays at the Revolution Wind project off Connecticut and Rhode Island and a Swedish hydrogen plant.

© Ørsted

And in its last update, on 20 January, Ørsted announced that issues with its US portfolio were still dogging the company.

This time, it was a 4.3b kroner (£480m) in the final quarter of 2024, driven largely by a weakening valuation for its US seabed leases.

This knocked 18% off of Ørsted’s share price, though it has recovered slightly since then.

This was all on top of problems developing its surviving US offshore wind farms – issues with building the onshore and offshore substations on its Revolution Wind project had pushed its expected start date from this year to 2026.

And Ørsted also warned its Sunrise Wind development “is navigating challenges related to supply chain and construction”.

But since Nipper joined in 2021, Ørsted’s share price has lost over 80% of its value, from its peak of 1,351.5 kroner (£151) at the start of 2021, down to the current point around 280 kroner (£31).

Nipper said: “Leading Ørsted through four challenging yet rewarding years has been a great privilege. Despite the obstacles we’ve faced, we’ve achieved many significant milestones, and I’m immensely proud of our colleagues’ efforts and dedication.

“I extend my gratitude to everyone who has supported and believed in our vision, and I wish Rasmus and the team all the best of luck.”

Discussing Nipper’s departure, Morningstar senior equity analyst Tancrede Fulop said: “The chairman of the board of directors vindicates Mads Nipper’s departure by the fundamental changes in the renewables space, including supply chain bottlenecks and interest rate increases. Those changes certainly played a key role in the 80% drop in Ørsted shares since January 2021.

“Still, there were also some missteps in which Nipper was involved, including Ørsted’s attempt to reassure the market about US offshore wind projects in June 2023, followed by large impairments and cancellation costs in November.

He added: “This impairment may have been the last straw for Nipper, though he wasn’t responsible for the US offshore wind bets, as only Ocean Wind 2 was awarded during his tenure. The Ocean Wind 1 project, which was cancelled and led to the highest impairment, was awarded under the tenure of his predecessor, Henrik Poulsen.

“The absence of indexation of the guaranteed electricity price turned out to be disastrous with high inflation.”

© Supplied by Orsted

Errboe joined Ørsted in 2012 and became a member of executive management in 2022. In addition to his current roles, he has held the position of interim group CFO, and was overall responsible for the IPO of Ørsted in 2016 and the divestment and carve-out of its oil and gas business in 2017.

Errboe said: “Ørsted has a strong foundation with unique capabilities, and I’m looking forward to taking the lead on the transformation necessary to navigate the headwinds that Ørsted and our industry currently face. Offshore wind remains crucial for the green transition, and we’re deeply committed to pursuing our vision of a world that runs entirely on green energy.”