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Eversource Exits Offshore Wind by Selling Ørsted JVs to Private Equity Firm

offshore wind farm
The deal includes South Fork Wind currently under construction in New York (Orsted)

Published Feb 14, 2024 4:47 PM by The Maritime Executive

 

Eversource Energy, the operator of New England’s largest energy delivery system, executed a definitive agreement to complete the exit from its large investment in the developing U.S. offshore wind energy sector through a joint venture with Ørsted. The deal would sell the 50 percent stake to a private equity manager, Global Infrastructure Partners, which in turn is being acquired by BlackRock, one of the world’s largest private asset managers.

The agreement calls for GIP to acquire Eversource’s 50 percent share in the 132 MW South Fork Wind project which is currently nearing completion and the 704 MW Revolution Wind project which received final federal approvals in November 2023 and is moving into the construction phase. South Fork is under contract to provide power to New York State, while Revolution Wind will split its power between Connecticut and Rhode Island.

Eversource expects to realize $1.1 billion of cash proceeds for the deal which will largely remove it from these projects. There are certain clauses to adjust the final price based on tax credits and potential construction cost overruns and Eversource will retain some obligations including for example onshore work for Revolution Wind.

The company had previously announced that while it believes in the potential for offshore wind energy production, its strategy would focus on its operations as a regulated transmission builder and operator.

Ørsted highlights that it has a longstanding partnership with Global Infrastructure Partners. The two companies currently have four strategic joint ventures. GIP is seen as a strong partner for these two additional late-stage wind projects, which are among the first in the U.S. to be moving into construction and completion. The deal also raises the potential that Ørsted will be in partnership with BlackRock which in January 2024 announced plans to acquire GIP. BlackRock has also shown interest in the offshore energy sector, although it is currently in a dispute with Taiwanese regulators who raised concerns about the investment manager.

This is the latest in a series of transactions announced by Eversource as part of its exit strategy from the offshore wind sector. The company in January 2024 entered into a deal to sell its 50 percent stake in the 924 MW Sunrise Wind project. Ørsted would acquire the position if it is successful in resetting the power agreements with New York State which it rebid in the recently closed solicitation. Ørsted has indicated it would proceed with 100 percent ownership of the project if it wins an agreement with New York State, or otherwise the two companies would look to other alternatives for Sunrise Wind.

Eversource in 2023 also sold its 50 percent interest in an uncommitted offshore lease to Ørsted. They received $625 million for the interest in the 175,000-acre site which could be developed into another wind farm project.

The sale to GIP will require federal and New York State approval. They expect South Fork Wind will complete construction and be fully operational before the closing, which is expected in mid-2024.