Eversource to sell wind farms

Eversource Energy is in advanced talks to unload its share in three offshore wind projects that it planned to build with Ørsted A/S, and will take a fourth-quarter charge of as much as $1.6 billion.

The U.S. firm is in exclusive negotiations to sell its 50% stakes in the developments to a “global private infrastructure investor,” it said Monday in a statement. The move follows writedowns by Ørsted across its U.S. portfolio in 2023, which helped send the company’s shares to the lowest level in years.

The fledgling U.S. offshore wind industry has been hammered by soaring inflation and supply-chain snarls that have driven up costs for developers. A number are canceling 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 Ørsted that are developing the South Fork, Revolution and Sunrise sites east of Long Island, N.Y. The U.S. firm expects an after-tax impairment charge of $800 million to $900 million on all of them. It will take an additional charge of as much as $700 million 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. Eversource shares slipped as much as 6.7% on Tuesday.

The company reduced the carrying value of the projects after estimated construction costs rose, as did uncertainties tied to the rate request ruling.

Ørsted 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 Ørsted shares from the ES announcement, other than perhaps sentiment,” she said.