Orsted has entered into a deal to purchase Eversource Energy’s 50% stake in the uncontracted federal offshore wind lease area that the two companies currently co-own.
This agreement encompasses not only the seabed, which is in the early stages of development, but also includes contracts and partnerships for vital operational assets in the north-eastern United States.
With a price tag of $625 million, this agreement reinforces Orsted’s prominent position in the US offshore wind energy sector and serves as a testament to the company’s dedication to establishing an American offshore wind industry.
By creating a supply chain that generates employment opportunities nationwide and drives innovation for the global market, Orsted aims to foster the growth of the industry.
The designated zone, known as Lease Area OCS-A 500 (Lease 500), spans approximately 187,000 acres of uncontracted seabed for offshore wind energy and boasts a potential capacity of up to 4GW. In addition to the seabed, Orsted will acquire contracts and leases for strategic port facilities and other assets.
The company will assume complete ownership of partnerships with the Port of Providence, the Port of Davisville, and Quonset Point, all located in Rhode Island, as well as with Connecticut’s New London State Pier.
Furthermore, Orsted will gain full ownership of the operations and maintenance hub in East Setauket, New York, and the charter agreement for the first offshore wind service operation vessel built in America. This vessel is currently being constructed at Edison Chouest’s facility in Houma, Louisiana.
David Hardy, executive vice president and chief executive of Region Americas at Orsted, said “I want to thank Eversource for our six-year partnership and for their expertise that has strategically advanced the onshore scopes of our three projects, which will deliver renewable energy to Rhode Island, Connecticut, and New York.”
“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. In addition to taking full ownership of seabed that is familiar to our team after years of work in this area, we will also be the sole bidder in our New York 3 and Rhode Island 2 active offshore wind solicitations.”
“The combination of the seabed and additional components in this agreement further establish a major hub in the north-east for our activities and future opportunities.”
Orsted considers Lease 500 as a valuable asset in its US offshore wind portfolio. The site holds strategic significance due to its proximity to Orsted’s existing projects, resulting in improved construction and operational efficiencies.
Furthermore, Lease 500 benefits from shallow water depth and favorable wind conditions. Situated approximately 40km off the southern New England coast, the site offers access to four markets, including Massachusetts, Rhode Island, Connecticut, and New York.
Joe Nolan, Eversource president, chief executive officer and chairman, said “We have had the pleasure of working alongside Orsted for more than six years and have experienced first-hand its expertise and global leadership in the offshore wind sector.”
“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.”
Eversource had previously announced its review of its offshore wind energy portfolio, leading to the decision to sell its uncontracted seabed and other interests to Orsted. In addition, Eversource determined that it is in their long-term interest to pursue the sale of their existing 50% stake in three jointly owned contracted offshore wind projects: South Fork Wind, Revolution Wind, and Sunrise Wind.
As part of the agreement, Eversource will provide tax equity for the South Fork Wind project. This tax equity arrangement is a crucial milestone for the South Fork Wind project as it prepares to commence operations and supply renewable energy later this year.
Eversource will continue to support the onshore aspects of all three projects throughout the construction phase, ensuring the portfolio’s long-term continuity and success.
The agreement is subject to customary closing conditions and regulatory review and is expected to be finalized in the third quarter of 2023.
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