Eversource reduces value of assets amid wind energy sector struggles

Eversource, the New England utility that is a 50-50 joint venture partner on two New York offshore wind farm projects, on Monday announced it would take an impairment charge for its offshore wind assets of up to $1.6 billion for the fourth quarter of 2023.

The charge, which reflects a lower estimated fair-market value for the three projects, comes even as Eversource is in the process of selling off its wind-energy assets and exiting the sector.

It's the latest indication of turbulent seas for the nascent U.S. offshore wind industry, which has been beset by higher interest rates and material costs. Last week, Equinor and BP announced they would terminate their previously awarded contract for a project called Empire Wind 2 off Long Island while they considered whether to issue a new bid in an upcoming state process.

In a statement released after the close of market Monday, Eversource chairman and chief executive Joe Nolan noted that offshore wind projects “continue to experience major supply-chain disruption and inflationary challenges in the early stage of growing this industry in the U.S., and this impairment is an unfortunate reflection of the current market conditions we are facing.”

Eversource’s partner in the projects, Denmark-based Orsted, has already taken more than $4 billion in impairment charges after discontinuing two offshore wind projects planned for New Jersey, and impairments on the value of its other projects, including those planned for New York State.

Orsted and Eversource are joint venture partners on these projects: South Fork Wind, a 130-megawatt project that has installed about half its 12 turbines and is already supplying partial energy to the South Fork of Long Island; Sunrise Wind, a 924-megawatt project destined to bring energy to Long Island at Smith Point; and Revolution Wind, a project for New England.

Orsted has said it is reviewing a final investment decision for Sunrise Wind to determine whether it will rebid the project in the request for proposals by New York State, which will announce awards next month.

In its statement, Eversource said revised construction costs for Sunrise Wind tied to supply chain constraints and “uncertainties related to the Sunrise Wind rebid process” have impacted the potential sales price of its ownership stake in that project as it seeks to finalize the sale of its wind assets. Last year Eversource said it had identified a buyer for the assets and expected to complete it soon.

Among the higher costs were “additional expenditures for construction,” including increased costs for installation vessels. Those factors alone led to an impairment charge, lowering the value of its wind assets of up to $900 million, Eversource said.

The New York State Public Service Commission's decision last year not to allow wind-farm bidders to adjust their energy prices upward to cover costs for inflation and interest rates, and the need to rebid in the new bidding process, is leading to another $600 million to $700 million in impairment charges, Eversource said.

“We are working with Orsted to determine whether to submit a new bid for Sunrise Wind, the price at which a new bid would be made, and the probability of success in the new bidding process,” Eversource said.

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.