Eversource Energy has sold the uncommitted lease area of approximately 175,000 developable acres located 25 miles off the south coast of Massachusetts to Danish offshore wind farm developer Ørsted for $625 million in an all-cash transaction.
The transaction, first announced on May 25, 2023, closed Friday following approval from the Committee on Foreign Investment in the United States.
Eversource and Ørsted on Friday also announced the execution of a Tax Equity Capital Contribution Agreement for the South Fork Wind project.
Eversource will use a portion of the proceeds from the lease area sale to provide its anticipated tax equity investment for South Fork Wind.
The contribution for Eversource’s new tax equity member interest is expected to be approximately $545 million.
"Eversource expects to recover this tax equity member interest investment primarily in the form of investment tax credits as turbines are placed in service for South Fork Wind. These credits will be utilized to reduce federal tax liability, including refunds expected over the next nine months," Eversource said.
Eversource said it also expected to receive approximately $273 million of this contribution as a distribution from the project prior to its commercial operations date, as it currently remains a managing member of the project, along with Ørsted.
Construction of South Fork Wind started in early 2022, with commercial operation expected in late 2023. Eversource’s tax equity investment in South Fork Wind is expected to close in the third quarter.
“Eversource is fully committed to being a catalyst to the region’s clean energy transition, with our regulated companies procuring power from offshore wind as well as 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. We share the same goals as the states in which we operate when it comes to building the clean energy delivery systems of the future,” said Joe Nolan, Eversource’s president, chief executive officer, and chairman. “With Ørsted as the 100% owner of this lease area, we are confident it will play a critical role in decarbonizing the generation mix of Southern New England and New York.”
Back in May 2022, Eversource announced that it had initiated a strategic review of its offshore wind investment portfolio. As part of that review, the company said it would explore strategic alternatives that could result in a potential sale of all or part of its 50 percent interest in its offshore wind joint venture with Ørsted
On Friday, Eversource said that as a result of the company completing its Offshore Wind Strategic Review, it is in the best long-term interest of the company to advance the sale of its existing 50 percent interest in its three jointly owned contracted offshore wind projects (South Fork Wind, Revolution Wind, and Sunrise Wind) with a total capacity of 1,758 MW. This process continues to progress and Eversource expects to announce details of this transaction soon.
Eversource has engaged Goldman Sachs as its financial advisor to assist with the transactions and Ropes & Gray serves as its legal counsel.