Ørsted Makes Conditional Deal to Take Full Ownership of Sunrise Wind

Singapore freight forwarders – Star Concord
25-Jan-2024

 

After raising questions about the financial health of the U.S. offshore wind energy industry, Ørsted appears to be changing course and again taking steps to move forward with projects in its portfolio as other companies however continue to exit the sector. Ørsted announced today it has signed an agreement with Eversource to acquire full ownership of Sunrise Wind, a 924 MW offshore wind farm that would deliver power to New York. 

Eversource reported earlier in January that it was moving forward with plans to exit its investments including its 50 percent interest in Sunrise Wind, which it had planned to jointly develop with Ørsted. The companies have two joint ventures, one for the development of South Fork Wind, a project that is under construction recently reaching the halfway mark, and another JV that holds both Revolution Wind and Sunrise Wind. Eversource said it was negotiating deals for its interest and expected to record an after-tax other-than-temporary impairment charge in the range of $1.4 to $1.6 billion in the fourth quarter of 2023 on these projects.

The news of the agreement for the sale of Sunrise Wind comes one day before New York State is set to close its fourth round of wind solicitations which includes a provision for existing projects to renegotiate their power purchase agreements. Ørsted is making the acquisition of the 50 percent stake in Sunrise Wind conditional on the successful award of Sunrise Wind in the ongoing New York solicitation and reaching an agreement with New York’s energy agency, NYSERDA, as well as receipt of the construction and operations plan, and relevant regulatory approvals. New York is expected to report the results of the solicitation by the end of February while final federal permits for Sunrise Wind are expected this summer.

“Following a thorough risk review of our US portfolio, we’re comfortable with taking full ownership of Sunrise Wind if the project is awarded in New York 4,” said David Hardy, Executive Vice President and CEO of Region Americas at Ørsted. “This transaction is a value-accretive opportunity for Ørsted and the best path forward for the project.”

They highlighted that the proposal is the most mature offshore wind project in New York’s pipeline, and assuming it can receive a new power agreement and final approvals, Sunrise Wind is expected to be completed in 2026. 

Sounding a more positive note on the offshore wind sector, Ørsted says, “Sunrise Wind will be our third offshore wind farm off the northeast coast, following South Fork and Revolution Wind, which are already under construction. The northeast is an increasing priority for Ørsted, including these projects, port assets, a trained workforce, and supply chain partners. We’re building a future offshore wind hub that is strategic for Sunrise Wind, if awarded, as well as for upcoming solicitations in the region, helping us to differentiate and de-risk potential future bids and projects.”   

If Sunrise Wind is not successful in the solicitation, the companies said the existing power contract for Sunrise Wind will be canceled per the state’s requirements, and Ørsted’s and Eversource’s 50/50 joint venture for Sunrise Wind will remain in place. In that scenario, the joint venture will evaluate its next steps. 

The plan for Sunrise Wind calls for the wind farm to be located at least 30 miles east of Montauk Point, on the eastern tip of Long Island, New York. It is adjacent to other lease areas controlled by the two companies.
 

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