The leaders of Eversource Energy have launched a strategic review of the company’s offshore wind assets and could sell its 50% stake in a joint venture with Ørsted A/S, the world’s largest developer of offshore wind farms.
Hartford- and Boston-based Eversource expects to complete the review later this year. Money from a possible JV stake sale, executives said May 4, “would likely be used” primarily to fund investments in the company’s regulated energy and water delivery networks, which they expect will total more than $18 billion between now and the end of 2026.
President and CEO Joe Nolan said the move comes in response to the record prices set during the recent federal lease auction for offshore wind projects in the New York Bight. (Six lease areas totaling about 488,000 acres garnered winning bids worth nearly $4.4 billion.) An Eversource sale, Nolan added, would create shareholder value while still having Eversource play a role in the energy transition.
“Eversource remains committed to supporting offshore wind with advocacy, transmission investment solutions, and clean energy resource integration,” Nolan said in a statement. “We have seen up close why Ørsted is unquestionably the world leader in engineering, building and operating offshore wind and have no doubt that the joint venture we launched five years ago will be a tremendous source of clean energy and economic development for the Northeast.”
The Eversource- Ørsted JV comprises three contracted projects with a combined capacity of 1,758 MW and up to 175,000 acres not allocated to a specific project. Two of the three existing projects are located east of Long Island’s Montauk Point while the third sits about 15 miles off Rhode Island’s coast. They are expected to come into service between late next year and late 2025 and will deliver power to parts of New York, Rhode Island and Connecticut.
The 175,000 open acres are about 25 miles off the south coast of Massachusetts; using the average per-acre price paid in the New York Bight auction, that property is worth more than $1.5 billion. Eversource has so far invested $1.3 billion in the three contracted projects and expects that number to grow by between $3.9 billion and $4.6 billion through 2026.
Nolan and his team announced the offshore portfolio review along with first-quarter earnings that showed a 21% year-over-year jump in net income to $445 million on revenues of nearly $3.5 billion, an increase of 23% from the first three months of 2021. The company’s electric transmission and distribution operations produced combined earnings of $299 million versus about $253 million in early 2021.
Shares of EverSource (Ticker: ES) were up nearly 3% to more than $91 in early trading May 5. Year to date, they have risen slightly, growing the company’s market capitalization to more than $31 billion.
