United States

United States

Ørsted buys Eversource stake in US offshore wind area for $625m

Ørsted has agreed to buy out US utility Eversource Energy’s 50% stake in the uncontracted federal offshore wind lease area they currently jointly own.

The deal will see Eversource provide tax equity for the South Fork Wind project in which both companies have a 50% stake
The deal will see Eversource provide tax equity for the South Fork Wind project in which both companies have a 50% stake

The Danish firm will pay $625 million (€583 million) to become sole owner of lease area OCS-A 500, which covers approximately 187,000 acres of seabed and has potential offshore energy capacity of up to 4GW.

The deal includes contracts and leases for port facilities and other assets, partnerships with five ports in New England, the operations and maintenance hub at East Setaukey, New York, and the charter for the first US-built offshore wind operations vessel, under construction in Louisiana.

Subject to regulatory review and other conditions, the deal is expected to close in the third quarter of 2023.

'Long-term commitment to offshore'

Following the deal, Ørsted will also be the sole bidder for the New York 3 and Rhode Island 2 offshore wind solicitations, said David Hardy, group EVP and chief executive Americas at Ørsted.

He added: “This acquisition further demonstrates our long-term commitment to building an American offshore wind energy industry and the value creation opportunities we see in the US market.”

Eversource said that because of the offshore-wind transactions, it expects that its second quarter 2023 results will include a non-recurring after-tax impairment charge estimated to range from $220 million to $280 million.

The utility has also entered into a binding letter of intent with Ørsted to use a portion of the proceeds from the lease area sale to provide tax equity for South Fork Wind, in which both companies have been 50% owners.  

The deal follows Eversource’s announcement last year that it was reviewing a possible sale of its offshore wind portfolio.

At the time that the strategic review was announced, Eversource cited the “record-setting prices” in the federal lease auction for tracts around the New York Bight and an “evolving landscape”.

Ørsted and Eversource formed their 50-50 partnership to develop offshore wind projects in the northeast US  in 2016, winning contracts for the 704MW Revolution Wind, 132MW South Fork Wind and 924MW Sunrise projects.

Clean energy player

Eversource, which operates New England’s largest energy delivery system, will still purchase wind power. 

“While we are pursuing an exit of the unregulated offshore wind business, 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,” said Joe Nolan, the company’s president, CEO and chairman.

Ørsted and Eversource also announced the launch of the first US-built offshore substation in Ingleside, Texas, by Kiewit Offshore Services. The 1,500-tonne plant will be installed at the South Fork wind project off Long Island, New York, which is due to begin operating by the end of this year.

Have you registered with us yet?

Register now to enjoy more articles
and free email bulletins.

Sign up now
Already registered?
Sign in