Ørsted A/S, the world’s largest developer of offshore wind farms, has agreed to pay Eversource Energy $625 million to take full control of about 175,000 leased acres off Massachusetts’ south coast. Eversource executives also said they have received offers for their 50% stake in three contracted offshore projects but expect to take a roughly $250 million charge to account for the Ørsted deal and any sale of the contracted projects.
Eversource and Ørsted have worked together on offshore wind sites for more than six years and expect to close their lease acreage transaction by the end of the third quarter. The companies’ terms call for Ørsted to initially pay $575 million and follow that up with another $50 million when Eversource completes a tax equity investment in the South Fork Wind project (one of three mentioned above) that is expected to come online late this year.
In a statement, the Eversource team led by Chairman, President and CEO Joe Nolan didn’t disclose details about who has expressed interest in the company’s 50% stakes South Fork and the other two projects in development—combined, those will have a capacity of 1,758 MW—but said they expect to announce a transaction for them by the end of June. The execs said in May of last year they would review their options for the assets.
However, they added, “the indicative bid values reflect recent unfavorable changes in market conditions that have resulted in a lower than expected sale value” which means Eversource will need to write down the value of its investments. The company’s second-quarter results will be hurt to the tune of $220 million to $280 million.
“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,” Nolan said. “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.”
Eversource is one of a number of electric utilities exiting unregulated renewables. Last October, Consolidated Edison Inc. agreed to a $6.8 billion deal with Germany’s RWE AG while American Electric Power Co. executives in February said they had come to terms with a consortium to divest their unregulated portfolio for $1.5 billion.
Shares of Eversource (Ticker: ES) were down nearly 4% to $68.18 in May 26 trading. Over the past six months, they have lost more than 15% of their value, cutting the company’s market capitalization to about $24 billion.
