Air giants take profit hit as war in Iran prompts energy pivot

The war in Iran appears to have taken a toll on the clean energy revolution, catering to wind power giants as countries reconsider the role of renewables in bolstering energy security.

Danish wind turbine maker Vestas reported an unexpectedly large first-quarter profit increase on Wednesday, citing improved onshore and offshore business despite growing political uncertainty.

Denmark’s Orsted also posted a stronger-than-expected profit in the first three months of the year, while Norway’s The Equinoroil and gas major, told CNBC that the Middle East crisis will bring a boost to profits in its clean technology division.

Torgrim Reitan, chief financial officer at Equinor, said the drivers of the energy transition had clearly changed during the Iran war, from a focus on decarbonisation to issues such as energy security, independence and self-sufficiency.

“In Europe, we’re seeing a lot of momentum behind that,” Reitan told CNBC’s “Europe Early Edition.”

Equinor, which posted its strongest quarterly profit in three years on Wednesday, has major offshore wind developments in the US, Poland and the UK, with the latter set to become the world’s largest wind farm when it starts production.

The oil and gas giant joined its industry rivals in reporting first-quarter results, benefiting from rising fuel prices since the US-led and Israeli-led war against Iran began on February 28.

Analysts expect the fallout from the Iran war to be an energy shock to prompt countries to direct more investment in clean energy services – a trend that could benefit companies with exposure to green technology.

“The priority for us is to deliver the projects we have in development and beyond that we will have to see a significant return from that business to invest – but we believe that what is happening now will really help the return on the type of industries that are changing,” said Equinor’s Reitan.

Orsted from Denmark said that the events in the Middle East reaffirmed the need to speed up the energy transition in Europe, highlighting the role of offshore wind in particular as an important part of this transition.

“If we look at what’s happening in the world, there is no reason not to change gears in the energy transition to renewables in Europe. Europe spends billions every week on the sale of fossil fuels – but it doesn’t have to be that way,” said Orsted CEO Rasmus Errboe in a statement.

“Onshore wind and other renewables can deliver secure, green energy and can significantly reduce the cost of home and business systems if deployed at scale,” he added.

Orsted, which has struggled in recent years with rising costs and supply disruptions, has doubled down on its European business following opposition to American wind power from the White House.

US President Donald Trump has a long history of deriding wind power, speaking at the World Economic Forum earlier this year that wind turbines are destroying the world and losing money as he focused on the European Union’s energy policy.

The EU’s Climate Commissioner, Wopke Hoekstra, dismissed Trump’s criticism as “nothing new” at the time, saying the region was taking a “very different view” on the transition away from fossil fuels.

Vestas CEO Henrik Andersen on Wednesday welcomed the company’s best first-quarter earnings since 2018, saying the better-than-expected result bodes well for the rest of the year.

“We’re in a much better place, probably than we expected a few months ago,” Andersen told CNBC’s “Squawk Box Europe,” before seeking to highlight the benefits of putting electricity on the grid.

When asked if the company is meeting with data center builders to discuss how renewable energy can support AI development, the Vestas CEO said he was traveling to the US over the weekend “and not surprisingly that’s part of the trip.”

In what appeared to be a reference to Trump, Andersen said: “Just because one person in the world has the wrong idea of ​​what the truth is … what it is, that doesn’t throw the whole community off the scale. So, things go on.”

Not everyone is convinced that investors will buy into the idea that recent geopolitical tensions could significantly accelerate the cycle of renewable investment.

“Overall, while energy security concerns may strengthen the long-term case for renewables, we see limited evidence that the Iran conflict is driving a near-term change in fundamentals,” Tancrede Fulop, senior equity analyst at Morningstar, told CNBC in an email.

“Between the two, Vestas appears to be better positioned to benefit from any acceleration in renewable deployments, while Orsted remains focused on developing its existing project pipeline,” he added.