Eversource to sell its stake in offshore wind project site to Orsted
Eversource Energy has agreed to sell its 50 percent interest in a currently uncommitted lease area of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts to Orsted.
The sale price is $625 million in an all-cash transaction. Orsted currently owns the other 50 percent share of the joint venture. The deal is expected to close by the end of the third quarter of 2023.
Further, Eversource has entered into a binding letter of intent with Orsted to use a portion of the
proceeds from the lease area sale to provide tax equity for the South Fork Wind project through a new tax equity ownership interest. Eversource will recover this investment mainly through investment tax credits that will be received around the time of the project’s commercial operations date. Construction of South Fork Wind began in early 2022, with commercial operation expected in late 2023.
In addition, Eversource, after a strategic review, determined that it is in the best long-term interest of the company to sell its existing 50 percent interest in its three jointly owned offshore wind projects — South Fork Wind, Revolution Wind, and Sunrise Wind. While this review process is still underway, Eversource anticipates an announcement by the end of June.
“We have had the pleasure of working alongside Orsted for more than six years and have experienced firsthand their expertise and global leadership in the offshore wind sector. We continue to expect that offshore wind projects built in our partnership’s lease area, including the three now under development, will play a critical role in decarbonizing the generation mix of Southern New England and New York,” Joe Nolan, Eversource’s president, CEO, and chairman, said. “While we are pursuing an exit of the unregulated offshore wind business, Eversource is fully committed to being a catalyst to the region’s clean energy transition, with our regulated companies building many of the facilities that will enable more than 9,000 megawatts of offshore wind generation to reach the homes and businesses of Southern New England.”
As a result of multiple bids and indicative offers from interested parties, Eversource has evaluated its aggregate investment in the three projects, uncommitted lease area, and
other related capitalized costs and believes that an other-than-temporary impairment exists. Eversource expects its second quarter 2023 results will include a non-recurring after-tax impairment charge currently estimated to range from $220 million to $280 million. The current estimate of fair value is based on the anticipated potential sales price of Eversource’s 50 percent interest in the three contracted projects, as well as the sale of the uncommitted lease area. Proceeds from the transaction will be used to pay off parent company debt.
“I want to thank Eversource for our six-year partnership and for their expertise that has strategically advanced the onshore scopes of our three projects, which will deliver renewable energy to Rhode Island, Connecticut and New York,” David Hardy, group EVP and CEO Americas at Orsted, said.
