Eversource exits offshore development, with a big loss

The utility expects to write off more than $200 million in losses from its joint venture to build wind farms off the Massachusetts coast

Even as work begins in New Bedford on Massachusetts' first large offshore wind farm, utility giant Eversource is bowing out of the offshore development business, selling stakes in several joint ventures it shares with Danish energy firm Orsted.Rodrique Ngowi/Associated Press

Breaking up can be hard to do. Just ask Eversource Energy.

The New England utility expects to record a big loss from its offshore wind investments as it exits the business, selling its 50-percent stakes in several ventures it shares with Danish energy company Ørsted. Eversource announced a year ago that it hired investment bank Goldman Sachs and law firm Ropes & Gray to explore whether to sell these stakes.

After taking much longer than expected, the company on Thursday confirmed it will indeed seek a corporate divorce from Ørsted. And Eversource disclosed what that breakup will cost, saying it expects to report an after-tax charge of $220 million to $280 million to reflect the drop in value of these projects, partially offset by gains in the value of a lease area it shares with Ørsted that does not yet have a committed wind farm proposal.

Investors didn’t seem rattled on Friday. Shares in Eversource were down only slightly during the day’s trading. As of March 31, Eversource had invested nearly $2.2 billion in offshore wind development alongside Ørsted.

Eversource is still working through various bids. To start things off, the Eversource board voted on Thursday to sell the company’s stake in that uncontracted offshore wind lease area known as “Bay State Wind,” consisting of 187,000 acres south of Martha’s Vineyard, to Ørsted for $625 million. That sale is expected to close by the end of September. Meanwhile, the company expects a resolution to the sale of its 50-percent stakes in the three Northeast wind projects that it shares with Ørsted — South Fork Wind, Revolution Wind, and Sunrise Wind — by the end of next month, with a closing anticipated by the end of the year.

As a result of these deals, Eversource will be out of the offshore wind power development business entirely. Eversource first teamed up with Ørsted in 2016 just as the European company, then known as DONG Energy, was building up its East Coast presence in anticipation of bidding on upcoming contracts to develop offshore wind farms. (Eversource, like several other major electric utilities, will still hold contracts with these wind farms to buy their power.)

Eversource’s exit from the offshore wind development business comes as the broader industry faces financial turmoil.

Several developers that signed state-orchestrated contracts to provide wind power have now found it challenging or impossible to meet the prices spelled out in those contracts because of a quick runup in costs last year tied to the war in Ukraine, rapidly rising interest rates, and supply chain issues. However, construction has begun in Massachusetts on the country’s first utility scale offshore wind farm, Vineyard Wind, which will generate power for the equivalent of more than 400,000 homes when it’s done next year. And preliminary work has started in Rhode Island for Revolution Wind, a slightly smaller project.