Eversource Energy has informed about the expected impairment charge of up to $1.6 billion related to three offshore wind projects in the United States.
The impairment the energy utility Eversource Energy expects is related to three projects it owns as part of two partnerships with Ørsted, including South Fork Wind, Revolution Wind and Sunrise Wind.
Back in May 2022, Eversource Energy 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% interest in its offshore wind joint venture with Ørsted.
In an update from January 8, 2023, the company confirmed it is currently in advanced, exclusive negotiations with the selected buyer to sell its ownership interest in the projects. Eversource Energy did not disclose the name of the buyer, stating only it was a leading global private infrastructure investor.
“We are pleased to advance the sale of our offshore wind interests and are appreciative of the support and collaboration we continue to receive from Ørsted on this very complex transaction,” said Joe Nolan, Eversource’s Chairman, President and Chief Executive Officer.
However, during the last quarter of 2023, Eversource Energy identified certain impacts that will require further adjustment to the carrying value of its offshore wind investments for the three projects.
According to Eversource Energy, the revised projected construction costs, caused primarily by supply chain constraints relating to the projects’ installation vessels and foundation fabrication, are expected to contribute to the other-than-temporary impairment in the range of approximately $800 million to $900 million across all of the three wind projects in the fourth quarter of 2023.
Also, the uncertainties related to the Sunrise Wind rebid process in New York’s current RFP issued in November 2023, have impacted the aggregate offshore wind ownership interest potential sales price with the buyer. For this, Eversource Energy foresees impairment of approximately $600 million to $700 million.
As a result of these developments, Eversource expects to record an after-tax other-than-temporary impairment charge in the range of $1.4 billion to $1.6 billion in the fourth quarter of 2023.
“Offshore wind projects continue to experience major supply chain disruption and inflationary challenges in the early stage of this growing industry in the U.S., and this impairment is an unfortunate reflection of the current market conditions we are facing.
“Eversource remains focused on advancing the efforts to decarbonize the energy sector and accelerate electrification with much needed investments in transmission and other clean energy infrastructure through our regulated utilities,” added Nolan.
Eversource Energy operates New England’s largest energy delivery system. It serves approximately 4.4 million electric, natural gas and water customers in Connecticut, Massachusetts and New Hampshire.
Subscribe
