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Equinor’s 3Q24 results were headlined by its decision to acquire up to a 10% stake in offshore wind developer Ørsted, boosting its renewables portfolio at a relatively low cost. However, the company continues to face challenges in achieving profitability in renewables, while setbacks in blue hydrogen raise concerns about the outlook for its Low Carbon Solutions business.

Our view

Equinor’s 3Q24 results confirm the challenges we anticipated with its renewable energy generation targets. The company has downgraded its guidance again, now just 50% growth for FY24 (~2.9 TWh), down from the original guidance of over 4 TWh. While renewables ambitions remain significant, the company continues to lag behind peers in delivering both earnings and capacity. To date, Equinor is the only major that has not reported a profit in low-carbon.

The Ørsted acquisition is advantageous, adding 1GW to Equinor’s renewables portfolio and highlighting M&A as a pathway for advancing its offshore wind strategy. From a decarbonisation perspective, as a minority shareholder, it is yet to be seen if this will lead to more new capital directed towards low carbon. The deal also introduces biomass heat and power plants into Equinor’s mix. Progress on Empire Wind is encouraging, now moving towards financial close after substantial impairments in US offshore wind last year.

While these developments are promising, Equinor’s transition strategy still lags behind its peers. Net Carbon Intensity (NCI) progress remains limited (-1% of the -20% target by FY30), and the lack of clear disclosures on Low Carbon Solutions raises concerns. With nearly half of Equinor’s 40% NCI target by FY35 reliant on this business, especially given blue hydrogen setbacks, greater clarity is needed on how it will deliver on long-term goals.

Priority questions ahead of 2025:

1) Quantification of levers to achieve Net Carbon Intensity (NCI) targets:

• How much will renewables contribute to FY30 NCI target reductions? Equinor’s decarbonisation strategy appears fundamentally dependent on netting strategies like CCS. We estimate nearly half of the company’s 40% NCI target by FY35 hinges on CCS – more information is needed on how Equinor will ensure this reliance doesn’t risk transition if unsuccessful.

2) Increases in low-carbon investment:

• How much capex is allocated to Renewables & Low carbon solutions? Equinor does not disclose capex for Low carbon solutions (part of midstream, marketing and processing segment). Investors lack transparency to track progress, especially with CCS likely forming a significant portion of low-carbon investment.

• How does Equinor plan to build a competitive and profitable renewables business? Equinor is currently the only major not reporting a profit in low-carbon. The company should detail its path to profitability to close the gap with peers.

Key findings