Orsted partner Eversource sees $1.6bn US offshore wind hit ahead of sale
Utility says costs and uncertainty over fresh New York bid impact value as talks with buyer proceed
Utility Eversource will take a hit of up to $1.6bn on the value of the US offshore wind projects it jointly owns with Orsted as it advances a planned sale of the stakes to a “leading global private infrastructure investor”.
Eversource announced an expected fourth quarter impairment of $1.4bn-$1.6bn as it updated investors on progress of previously announced sale plans of its 50% ownership of the South Fork, Revolution and Sunrise projects totalling 1.75GW it currently owns 50/50 with the Danish giant off the US Northeast.
Like Orsted and other US offshore wind investors, Eversource has crunched the numbers on the value of its projects in light of the multiple pressures bearing down on the industry – and which in its case could affect the sale price of any deal with the unidentified buyer.
“Revised projected 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’s current RFP issued on November 30, 2023, have impacted the aggregate offshore wind ownership interest potential sales price with the buyer,” the utility told its investors.
Sunrise must now decide whether to rebid into a new round subsequently announced by the state.
“We are working with Orsted to determine whether to submit a new bid for Sunrise Wind, the price at which a new bid would be made, and the probability of success in the new bidding process. Based on these events, we expect to record an after-tax other-than-temporary impairment in the range of approximately $600m to $700m for Sunrise Wind in the fourth quarter of 2023,” Eversource said.
Eversource CEO Joe Nolan said: “Offshore wind projects continue to experience major supply chain disruption and inflationary challenges in the early stage of this growing industry in the US, and this impairment is an unfortunate reflection of the current market conditions we are facing.”
Orsted, along with New York JV partners Equinor and BP and other players, have spent months at the centre of a financial storm over their US ambitions, with power deals and projects cancelled for major developments off the Northeast.