Enbridge CEO Sees Renewable-Energy Stock Slump Limited to Short-Term Sellers

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Enbridge Inc. Chief Executive Officer Greg Ebel said the slump in renewable-energy stocks is likely to be limited to companies that sell green energy into wholesale markets, rather than providers with long-term contracts.

Enbridge — which operates a range of energy assets from oil and gas pipelines to solar power projects — said Friday that it had boosted its ownership in the Hohe See and Albatros offshore wind farms in Germany by 24% for about 625 million euros ($670 million). The Calgary-based company also agreed to buy seven operating landfill-based renewable gas assets in Texas and Arkansas for $1.2 billion.

“Investors are starting to figure out that renewables are not all built the same,” Ebel said in an interview on Bloomberg Radio. “Those that have long-term contracts — for 10 or 15 years with great counterparties like large utilities or big industrials — those are the ones you want to participate in.”

This week, Orsted A/S dropped two US wind projects and recorded 28.4 billion kroner ($4 billion) in impairments, the latest development in the burgeoning crisis in the offshore wind industry. Surging costs and rising interest rates have led to project delays in the sector.

Developers have been rapidly backpedaling on their plans for wind farms or asking to re-negotiate their deals. Some of those companies were locked into long-term contracts to deliver power at specific prices, and those deals became unviable after development costs surged.

The German wind farms Enbridge boosted its stake in have long-term, government-backed power purchase agreements, while the renewable gas assets it bought have long-term, full-volume offtake deals with Shell Plc and BP Plc, executives said on a conference call on Friday.

Enbridge also on Friday reported adjusted third-quarter earnings of 62 Canadian cents a share, topping analysts’ 58-cent average estimate. The shares were up 0.3% to C$46.20 at 12:29 p.m. in Toronto.