For years, Danish Oil and Natural Gas Co. did what many other big oil companies do: pumped hydrocarbons out of the North Sea.
Today, it’s the world’s largest developer of offshore wind energy, and exceeds the market value of oil giants Occidental Petroleum Corp. and Eni SpA.
Renamed Ørsted AS , it’s one of a handful of once-small energy companies that have grown after pivoting from fossil fuels to renewables, including Spain’s Iberdrola SA, Italy’s Enel SpA and America’s NextEra Energy Inc.
As many oil companies now seek to follow suit, Ørsted is a case study on how hard the shift is. It took government intervention, years of subsidies and a wide-open competitive landscape for Ørsted to succeed. Shareholders and board members repeatedly questioned the strategy shift, and the costs ballooned the company’s debt, nearly derailing it.
Today, subsidies are falling, if they exist at all. Competition for new wind and solar projects is fierce. And returns are lower than most big oil developments.