Eversource to return to ‘pure play pipes and wires utility’ with $1.6bn US offshore wind generation exit
Transactions and tax equity to offset up to $1.6bn impairment last year on project cost overruns
Boston-based electric and gas utility Eversource Energy is closing in on exiting its US offshore wind joint venture with Denmark’s Orsted to return to its core businesses, company CEO Joe Nolan said on an earnings call today (2 May).
Eversource will sell its 50% share in the 132MW South Fork Wind and 704MW Revolution Wind projects to Global Infrastructure Partners (GIP).
The deal that will realise $1.1bn for the utility, which has been Orsted’s joint venture partner in the US since 2016.
Eversource has also announced the execution of a purchase and sales agreement for the 920MW Sunrise Wind farm to partner Orsted for an undisclosed sum.
“I am pleased to report that we are on track to close the sale of the three projects over the coming months,” said Nolan.
“Now that our offshore wind risk is largely behind us, we are very excited about the future,” said Nolan.
“Eversource is moving forward as a pure play regulated pipes and wires utility business, doing what we do best, delivering clean energy safely and reliably to our customers every day,” he added.
The transactions will need greenlights from state and federal regulatory bodies, including the New York Public Service Commission (NYPSC) and the Federal Energy Regulatory Commission (FERC).
“We anticipate these approvals will take about 90 days,” Nolan said.
Deal terms are straightforward for South Fork, which has already completed construction off New York and is in the commissioning process. The agreement, however, allows for a 50/50 sharing by Eversource with GIP for up to $240m of potential cost overruns at Revolution, reflecting the ongoing uncertainties in the US offshore wind market.
In addition to the sales, Eversource CFO John Moreira said: “We anticipate utilising our tax equity investments in South Fork Wind, which we expect will bring around $500m in cash over the next 24 months.”
Eversource operates in Connecticut, Massachusetts, and New Hampshire, where it supplies electricity, natural gas, and water to some 4 million customers.
Impairment
In January Eversource announced an expected fourth quarter 2023 impairment of $1.4bn-$1.6bn due to escalating construction costs caused primarily by supply chain constraints “relating to the projects’ installation vessels and foundation fabrication, and uncertainties related to the Sunrise Wind rebid process in New York,” the utility said at the time.
The successful rebid of Sunrise into the New York round 4 procurement will impact that impairment and “will be reflected in our results in the quarter in which the sale closes,” Eversource said, expecting the transaction to close in the third quarter.
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