Eversource completes sale of US offshore wind area to Orsted for $625m amid 'strategic review'
The Boston-based utility has been mulling exiting the sector for over a year and promises additional sales of its 50% stake in South Fork, Sunrise, and Revolution projects
Boston-based utility Eversource Energy on Thursday said it had completed sale of an uncommitted offshore wind lease area off the coast of Massachusetts to joint venture partner Orsted for $625m in an all-cash transaction.
The lease area – 0500 – off Massachusetts covers 175,000 developable acres (708km2) and holds at least 2.1GW of capacity – although likely more. The acreage located 25 miles (40 km) was purchased for $281,285 in 2015 and is the site of the JV’s 800MW Bay State Wind that failed to win a contract in Massachusetts.
“Eversource is fully committed to being a catalyst to the region’s clean energy transition, with our regulated companies procuring power from offshore wind as well as 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,” CEO Joe Nolan said.
“With Orsted as the 100% owner of this lease area, we are confident it will play a critical role in decarbonizing the generation mix of Southern New England and New York,” he added.
Eversource will use some $545m of the proceeds to provide its anticipated tax equity investment for South Fork.
The utility said it expects to recover this investment primarily in the form of investment tax credits (ITC) as turbines are placed in service for the project.
These credits will be used to reduce its federal tax liability, including “refunds expected over the next nine months”, Eversource said.
As Eversource currently remains a managing partner for the South Fork project currently under construction in the waters east of Long Island, New York, it also expects to receive some $273m as a distribution from the project prior to its commercial operations date.
South Fork expects to begin powering the Long Island power grid before the end of this year.
The utility has been mulling exiting the sector for over a year.
Through its Offshore Wind Strategic Review, Eversource has concluded that “it is in the best long-term interest of the company to advance the sale of its existing 50% interest in its three jointly owned contracted offshore wind projects”.
The company said the process continues to progress and expects to announce details of this transaction soon.
Eversource has engaged Goldman Sachs as its financial advisor to assist with the transactions and Ropes & Gray serves as its legal counsel.
The sale comes as Orsted revealed a possible $2.34bn impairment charge related to its US projects, which include its JV with Eversource as well as Ocean Wind 1 and 2 in New Jersey totalling 2.25GW and the 1GW Skipjack in Maryland.