Eversource mulling end to wind venture
After offshore lease auction brings record prices, it may shift spending to boost electric, gas, water
Eversource Energy, eyeing blockbuster offshore wind leases, says it is reviewing its future in an offshore wind power partnership and may shift billions of dollars to strengthening its electric, gas and water systems.
It committed $225 million to a 50-50 partnership with Danish energy company Ørsted in 2019. Eversource Chief Executive Officer Joe Nolan now says recent winning bids of $4.4 billion — the largest ever — from six companies in a February offshore lease auction prompt a review of its continued offshore energy work.
“In light of the record-setting prices in the recent federal lease auction . . . and an evolving landscape, we are conducting a fulsome review of our interest in the joint venture with Ørsted to assess alternatives that will allow us to create shareholder value and continue building a leading clean energy company that is wholly supportive of our region’s climate change goals,” he said late Wednesday.
If the company decides to sell all or part of Eversource’s interest in the venture, it expects potential proceeds would likely be used to bolster its electric, gas and water systems. The review will be completed this year.
Eversource has identified more than $18 billion in investments it plans for its systems between now and 2026. Some potential additional initiatives, such as advanced metering infrastructure and
additional transmission spending to connect offshore wind projects through Cape Cod, are not yet reflected in its long-term forecast, Eversource said.
“We have concluded that now is an appropriate time to explore monetization of our offshore wind investments,” Nolan told investors Thursday on a conference call reviewing first-quarter financial results.
Shares of Eversource ended the day up 1.4%, at $89.82 as broader markets fell sharply.
Connecticut approved a $157 million project in February 2020 to redevelop the State Pier in New London into a wind energy hub. The cost has since grown to nearly $236 million as of February. An original completion date of August will now be next January.
Gov. Ned Lamont said he does not believe that if Eversource quits the project, “it will mean anything in terms of the State Pier and wind power.”
“Ørsted has got the resources to do this,” the governor said at a Capitol news conference Thursday.
David Hardy, CEO of Ørsted Offshore North America, said Eversource has been a “valuable local partner” and the lucrative offshore auction results demonstrate that the joint business venture has “expanded, matured and appreciated.”
Joint projects include Revolution Wind, Connecticut’s first offshore wind farm, at 704 megawatts to Connecticut and Rhode Island; South Fork Wind that’s under construction and would provide 130 megawatts to New York; and Sunrise Wind, supplying 924 megawatts to New York. The two companies also have an open lease area 25 miles off the south coast of Massachusetts.
Daniel Rich, an analyst at CFRA Research, said in a client note the offshore wind investment could support Eversource’s longer-term earnings growth with above-average returns and help it meet its net-zero carbon emissions goal for 2030.
He said selling its wind power interest would allow Eversource to “reorient capital spending” to its regulated utilities and could reduce risk for Eversource created by uncertainty over clean energy tax credits in President Joe Biden’s Build Back Better legislation that has stalled in Congress.