Changing winds: Turbines operated by Orsted at the Block Island Wind Farm off the coast of Block Island, New York. Eversource owns stakes in two joint ventures with Orsted that are developing the South Fork, Revolution and Sunrise sites east of Long Island. — AP
NEW YORK: Eversource Energy is in advanced talks to unload its share in three offshore wind projects that it planned to build with Orsted A/S, and will take a fourth-quarter charge of as much as US$1.6bil.
The US firm is in exclusive negotiations to sell its 50% stakes in the developments to a “global private infrastructure investor”, it said in a statement.
The move follows writedowns by Orsted across its American portfolio in 2023, which helped send the company’s shares to the lowest level in years.
The fledgling US offshore wind industry has been hammered by soaring inflation and supply chain snarls that have driven up costs for developers.
A number are cancelling contracts and walking away from planned projects, posing a threat to President Joe Biden’s ambitious offshore-wind target of 30 gigawatts by 2030.
Eversource owns stakes in two joint ventures with Orsted that are developing the South Fork, Revolution and Sunrise sites east of Long Island, New York.
The firm expects an after-tax impairment charge of US$800mil to US$900mil on all of them.
It will take an additional charge of as much as US$700mil for Sunrise after local regulators rejected a request for higher rates for the project.
“This impairment is an unfortunate reflection of the current market conditions we are facing,” chief executive officer Joe Nolan said in the statement.
The company reduced the carrying value of the projects after estimated construction costs rose, as did uncertainties tied to the rate-request ruling.
Orsted slipped as much as 1.9% in Copenhagen on Tuesday.
Since the Danish company had already marked down the value of these assets on its books last year, it won’t take a significant hit from the move by Eversource, Citigroup Inc analyst Jenny Ping wrote in a note.
“We see limited direct impact to Orsted shares from the ES announcement, other than perhaps sentiment,” she said. — Bloomberg
