Orsted to take full ownership of Sunrise Wind project if it gets state contract

Offshore wind developer Orsted on Wednesday said it agreed to acquire partner Eversource’s stake in the Sunrise Wind project if the Long Island-destined project is awarded an updated contract by the state.

Orsted, of Denmark, and Eversource, the New England power utility, are 50-50 joint venture partners in three projects planned for the burgeoning U.S. offshore market. Eversource last year said it has been working to divest its ownership interest in the ventures, and earlier this month disclosed it plans to take up to $1.6 billion in impairment charges tied to the offshore wind ventures it intends to divest, including Sunrise Wind.

Orsted had previously said it had yet to make a decision on whether or not to bid Sunrise Wind in the latest state procurement process, pending an internal review.

But in an announcement after the close of financial markets Wednesday, Orsted said it signed an agreement with Eversource to acquire its 50% share of Sunrise Wind “subject to the successful award” of the project in the ongoing state bidding process.

The state is conducting an expedited bid for several previously awarded offshore wind projects. The developers had sought special cost-adjustment clauses after the cost of offshore wind projects skyrocketed because of inflation and interest rate pressures.

Orsted said its offer to buy out its partner is also contingent on the signing of an energy contract with the state, finalization of acquisition agreements, receipt of a construction and operations plan, and certain regulatory approvals.

The two companies have begun on-land construction for Sunrise Wind, which proposes to deliver 924 megawatts of energy to the LIPA grid from an array off the coast of New England. The energy would be carried on a 17-mile cable slated to be constructed from Smith Point to a substation in Holbrook.

The two companies have nearly completed work on a separate offshore wind project for the South Fork of Long Island, a 130-megawatt array off the coast of Rhode Island that’s already delivering energy to the Long Island grid. Six of 12 turbines remain to be installed, the companies said this week. Wednesday’s announcement didn’t mention whether Orsted would acquire Eversource’s interests in any other joint projects.

Orsted late last year stunned the U.S. offshore industry by announcing that it would stop development of two projects it had been awarded to construct for New Jersey, while taking more than $4 billion in impairment charges — a reduction in the value of assets — to walk away from them.

Orsted said Sunrise Wind could be completed by 2026, if it’s awarded the latest state contract. Bids for the solicitation are due by the end of this month, and a decision on award winners could be made sometime in February.

“Following a thorough risk review of our U.S. portfolio, we’re comfortable with taking full ownership of Sunrise Wind if the project is awarded” in the state procurement, said David Hardy, group executive vice president and chief executive officer for Orsted’s Americas region, in a statement. He called the contingency deal with Eversource the “best path forward for the project.”

The two companies are also partners on another project, Revolution Wind, slated for New England

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

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