Eversource Energy has executed a definitive agreement to sell its 50% share in the 132MW South Fork Wind and 704MW Revolution Wind offshore wind farms to Global Infrastructure Partners (GIP).
The transaction allows Eversource to realise approximately US$1.1bn of cash proceeds upon closing and to exit these projects while retaining certain cost sharing obligations for the construction of Revolution Wind, the utility said.
These cost sharing obligations provide that Eversource would share equally with GIP in GIP’s funding obligations for up to approximately US$240m of incremental capital expenditure overruns incurred.
After this time, GIP’s obligations for any additional capital expenditure overruns would be borne by Eversource consistent with the existing joint venture terms.
In addition, around the time of commercial operation of Revolution Wind and closing for South Fork Wind, Eversource’s financial exposure will be adjusted after taking into account the updated project economics.
Commercial operation of Revolution Wind is expected in 2025.
Since South Fork Wind is expected to enter service before the transaction closes, Eversource’s financial ties to South Fork Wind, other than as a tax equity partner, are expected to largely be resolved at closing.
Eversource plans to use the proceeds from this sale to repay parent debt.
Orsted’s 50% ownership interests in the offshore wind farms are not affected by the sale.
Eversource is expected to enter into a separate construction management agreement as a contractor to Revolution Wind to complete the onshore work that is currently underway.
Eversource will maintain its previously announced tax equity investment in South Fork Wind.
At or prior to closing of the sale to GIP, Orsted and GIP intend to enter into definitive partnerships and services agreements.
Closing of the transaction will also require regulatory approvals from the Federal Energy Regulatory Commission as well as customary antitrust filings and New York Public Service Commission approvals.
Joe Nolan, Eversource Energy chairman, president, and chief executive, said: “We continue to believe that offshore wind represents the most significant opportunity to decarbonize the electric generation footprint of New England.
“Eversource will remain an integral player in this historic shift to a clean energy generation mix by focusing on our strengths as a regulated transmission builder and operator and bringing the benefits of these investments to our customers.”
Bayo Ogunlesi, Global Infrastructure Partners’ chairman and chief executive, added: “We are pleased to announce our acquisition of a 50% stake in two significant offshore wind projects from Eversource.
“This acquisition marks our fourth strategic joint venture with Orsted, further solidifying our strong partnership with leading industry players.
“The South Fork Wind and Revolution Wind projects benefit from long-term offtake agreements and play a pivotal role in addressing the increasing demand for clean electricity.”
David Hardy, group executive vice president and chief executive of the Americas at Orsted, added: “We want to thank Eversource for their partnership and the critical work we have done together to advance offshore wind energy in the Northeast.
“Global Infrastructure Partners is a longstanding global Orsted partner that is committed to renewable energy development, and we’re pleased the US industry continues to attract world-class investors.
“With GIP as a partner, we will further realise the value of offshore wind in Rhode Island, Connecticut, and New York, creating good-paying jobs and affordable clean energy.”