It paired with Vestas to design a more powerful offshore wind turbine. The turbine, known in the industry as "the beast" for its size, was tested at a site hours from the companies' headquarters -- Vestas and Ørsted staff brainstormed solutions on shared car journeys to the site and meals after hours, according to Anders Vedel, chief scientific adviser at Vestas.
The company retrained staff who had worked on its coal power plants to work on the wind farms. Flemming Thomsen spent the 1990s building coal power plants before switching to overseeing wind farms. The pace of change was concerning to workers, he said.
"It was not a problem to motivate people to work with wind," he said. "When we had resistance it was more to say, can we afford it, and can we build a power system based upon wind nearly alone."
When the company decided to sell its engineering department, which serviced the fossil-fuel power plants, Mr. Thomsen thought it was the wrong decision -- "I said to the guy who made the decision, you're crazy."
In the end, the tight focus on wind power was the right decision, he said.
Staffers in the wind department had a clear indicator of their new status. Historically, the U.K. wind energy team worked in the basement of the office in what was dubbed the "London Dungeon," while the oil and gas teams were upstairs with views over Buckingham Palace's gardens, said Thomas Brostrøm, previously head of Ørsted's North American business.
By 2015, when the company moved into renovated offices nearby, "wind were the big guys," said Mr. Brostrøm, who recently has taken a job at Shell. The wind team occupied several floors including the fifth, alongside the U.K.'s managing director.
Ørsted's breakthrough came when it won three U.K. projects in 2014. While many competitors thought the subsidies on offer weren't attractive enough, the company was convinced greater volume would reduce costs. All three have been profitable. It is helped by a government-guaranteed electricity price of GBP140 per megawatt-hour for 15 years, more than double U.K. electricity prices in recent years.
One, Hornsea 1, off the east coast of England, is now the world's largest operating offshore wind farm.
Windy conditions and shallow water in the North Sea encouraged Germany, Denmark, the Netherlands and Belgium also to pursue projects. That led to a dramatic fall in costs for offshore wind farms, down more than 65% as of last year from 2012, according to Ørsted.
By 2016, when it listed in Copenhagen, it was Denmark's largest initial public offering. The company then sold its remaining oil-and-gas business to chemicals giant Ineos for over $1 billion.
The transformation complete, it took the name Ørsted, after a Danish scientist, even though there were hesitations about using the Ø, a letter unfamiliar to non-Scandinavians. The name is pronounced "Errh-sted."
Today, the number of companies in the field has exploded, and analysts say increased competition in auctions could squeeze margins on projects that are typically awarded by governments based on the lowest electricity price a company is willing to sell their power.
Financial returns aren't as good as for oil and gas projects. Traditionally returns of around 15% are targeted for hydrocarbon projects, according to RBC Capital Markets, compared with the 7% to 8% Ørsted targets for some of its projects. Some investors say that while returns are lower on wind projects, they are less volatile and more predictable.
That difference has made it tough for investors in large oil companies to buy into the logic of a wholesale shift toward renewables.
"Investors are asking how long will it be before oil majors' earnings from renewables businesses are big enough to offset the decline in the legacy businesses. My impression is that it's definitely a few years out, " said Tim Porter, chief investment officer at Reaves Asset Management, which has around a $100 million stake in Ørsted. "The size of the business that's in decline is far bigger than the size of the business that's growing for these companies."
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(END) Dow Jones Newswires