What is happening?

The Danish Orsted wants to be the Jolly green Giant: The power company on Wednesday unveiled an offer of $ 57 billion to become the world’s largest producer of renewable energy.

What does it mean?

Orsted – formerly known as DONG Energy – is already the largest builder of offshore wind farms in the world. But the company from the home of two famous Hans Christian is now looking to extend that lead while expanding its presence in other areas such as solar and onshore wind.

The increased spending plan of $ 57 billion is committed to making Orsted the world’s largest renewable energy provider by 2030, but it will have to withstand fierce competition. Spain’s Iberdrola has budgeted $ 183 billion to achieve the exact same ambition, while Italy’s Enel last year unveiled plans to roughly triple its renewable capacity within the same timeframe as part of a 195 billion dollars investment plan – which could cause it to take the low carbon laurels instead.

Why should I care?

For markets: Drop me.
The Orsted share price has indeed fallen by more than 5% following its announcement. Perhaps that’s because it highlights just how crowded the renewable energy sector has become: Besides specialty producers, oil and gas companies are also quickly turning to green energy production. The risk is that the battle for growth comes at the expense of profit, with stiff competition driving down returns for everyone involved.

The overview: Green is the new black.
Despite the prospect of declining profits from renewable energy projects, don’t expect companies historically focused on oil and gas to hold back on spending. The International Energy Agency says these companies are still not doing enough to cut emissions and limit irreversible climate change. It pushes them to accelerate the pace of the transition to renewable energies and to quadruple their levels of environmentally friendly investments in the years to come – if not.