Eversource Energy has completed its strategic review of its 50% interest in a major North American offshore wind development site. The company announced several updates following the review, emphasizing its commitment to clean energy and the region’s transition to a sustainable future.
Eversource withdraws from the unregulated offshore wind sector with the sale of its stake in Ørsted
In an important move, Eversource has agreed to sell its 50% interest in an uncommitted leasehold area covering around 175,000 acres of development, located 25 miles off the south coast of Massachusetts, to Ørsted. Ørsted, the world’s leading player in the offshore wind sector, currently owns the remaining 50% of the joint venture, including the uncommitted lease area. The cash transaction is estimated at $625 million and is expected to close by the end of the third quarter of 2023, subject to regulatory approvals from the Committee on Foreign Investment in the United States.
In addition, Eversource has signed a binding letter of intent with Ørsted to use part of the proceeds from the sale of the lease area. These funds will be used to provide tax equity for the South Fork Wind project through new participation in tax credits. The investment tax credits received when the project goes into commercial operation will enable Eversource to recoup this investment. The South Fork Wind project, for which construction began in early 2022, should be operational by the end of 2023. The tax equity investment in South Fork Wind is also expected to close in the third quarter.
In addition, Eversource has determined that it is in the company’s long-term interest to proceed with the sale of its 50% stake in its three joint offshore wind projects already contracted. These projects – South Fork Wind, Revolution Wind and Sunrise Wind – have a total capacity of 1,758 MW. The process of selling these projects is underway, and Eversource expects to announce a decision by the end of June.
Although Eversource plans to withdraw from the unregulated offshore wind sector, the company remains fully committed to being a catalyst for the transition to clean energy in the region. Eversource’s regulated subsidiaries will continue to build facilities enabling more than 9,000 megawatts of offshore wind generation to supply power to homes and businesses in southern New England.
Eversource updates its offshore wind energy strategy
Eversource acknowledges that due to several offers from interested parties, other than temporary impairment exists. The company expects its second-quarter 2023 results to include a non-recurring after-tax impairment charge estimated at between $220 and $280 million. This charge is based on the anticipated potential sale price of Eversource’s 50% interest in the three contracted projects and the uncommitted lease area. Proceeds from the transaction will be used to repay the parent company’s debt, ensuring that the impairment charge will have no impact on Eversource’s customers.
In a separate announcement, Eversource confirmed its non-GAAP earnings guidance for the year 2023 at between $4.25 and $4.43 per share. The company also reaffirmed its long-term earnings per share growth rate, solidly in the upper half of 5-7%, based on a base figure of $4.09 per share in 2022.
Eversource called on Goldman Sachs as financial advisor for the transactions, while Ropes & Gray acted as legal counsel. As operator of New England’s largest energy distribution system, Eversource Energy serves approximately 4.4 million electric, natural gas and water customers in Connecticut, Massachusetts and New Hampshire.
Eversource Energy’s strategic review has led to significant updates in the offshore wind energy sector. The company’s collaboration with Ørsted has been instrumental in promoting renewable energy projects and decarbonizing the region’s energy mix. By withdrawing from the uncommitted lease area and contracted projects, Eversource aims to focus on its role as a catalyst in the transition to clean energy, while reaffirming its commitment to long-term growth and serving its customers in the utility sector.
