Offshore

Eversource sells offshore wind projects for $1.1B

Eversource sells offshore wind projects for $1.1B
The first turbine is installed on South Fork Wind (Credit: Orsted)

Eversource announced it has executed a definitive agreement to sell its 50% ownership share in South Fork Wind and Revolution Wind to Global Infrastructure Partners (GIP), following increased costs and economic uncertainty across the offshore wind industry.

The transaction allows Eversource to realize approximately $1.1 billion of proceeds upon closing and to exit these projects while retaining certain cost-sharing obligations for the construction of Revolution Wind. These cost-sharing obligations provide that Eversource would share equally with GIP in GIP’s funding obligations for up to approximately $240 million of incremental capital expenditure overruns incurred, after which GIP’s obligations for any additional capital expenditure overruns would be borne by Eversource consistent with the existing joint venture terms.

In addition, around the time of the commercial operation of Revolution Wind and closing for South Fork Wind, Eversource’s financial exposure will be adjusted after taking into account the updated project economics. Commercial operation of Revolution Wind is expected in 2025. Since South Fork Wind is expected to enter service before the transaction closes, Eversource’s financial ties to South Fork Wind, other than as a tax equity partner, are expected to largely be resolved at closing, Eversource said. Eversource plans to use the proceeds from this sale to repay parent debt.

On January 24, Eversource announced that it had reached an agreement to sell its 50% interest in the 924-MW Sunrise Wind project to Ørsted, contingent on the successful award of the NY04 NYSERDA Offshore Wind Renewable Energy Credits Agreement request for proposal and other conditions. Ørsted’s 50% ownership interests are not affected by the announcement, Eversource said. Eversource is expected to enter into a separate construction management agreement as a contractor to Revolution Wind to complete the onshore work that is currently underway. Eversource will maintain its previously announced tax equity investment in South Fork Wind.

Eversource said during Q3 2023 it identified “certain impacts” like increased construction costs and economic uncertainty that would require further adjustment to the carrying value of its offshore wind investments for the projects.

In October 2023, the New York State Public Service Commission denied petitions filed by a group of offshore wind developers and a state renewable energy trade association seeking billions of dollars in additional funding from consumers for four proposed offshore wind projects and 86 land-based renewable projects. In denying financial relief, the Commission said it opted to preserve the bidding process that provides renewable energy resources to New York in the fairest and most cost-effective manner.

The petitions denied were submitted by Empire Offshore Wind LLC and Beacon Wind LLC, Sunrise Wind LLC, and the Alliance for Clean Energy New York, Inc. (ACENY). The petitions were seeking an adjustment to Renewable Energy Credit (REC) and Offshore Wind REC (OREC) purchase and sales agreements entered with NYSERDA to address recent inflationary pressures that are impacting project economics. Following this decision, the general terms of an expedited offshore wind renewable energy solicitation in New York were released, but a primary condition for Sunrise Wind to participate in the solicitation is to agree to terminate its existing OREC agreement, Eversource said.

Under the agreement, Eversource’s existing credit support obligations are expected to roll off for each project around the time that each project completes its expected capital spend.

At or prior to the closing of the sale to GIP, Ørsted and GIP intend to enter into definitive partnerships and services agreements. Closing of the transaction will also require regulatory approvals from the Federal Energy Regulatory Commission as well as customary antitrust filings and New York Public Service Commission approvals.

“We continue to believe that offshore wind represents the most significant opportunity to decarbonize the electric generation footprint of New England,” said Joe Nolan, Eversource Energy Chairman, President, and CEO. “Eversource will remain an integral player in this historic shift to a clean energy generation mix by focusing on our strengths as a regulated transmission builder and operator and bringing the benefits of these investments to our customers.”

In May 2023, Eversource announced that it would sell its 50% interest in approximately 175,000 of developable but uncommitted offshore acres to Ørsted for $625 million. That transaction closed on September 7, 2023.