The Day – Eversource eyes potential big payday to pull out of Connecticut wind farm
Eversource Energy is seeking buyers for its share of the long-planned Revolution Wind offshore energy project.
Revolution Wind is one of two large wind farms planned off the south coast of New England that would generate electricity for Connecticut. The other project is the Park City wind farm being developed by Orange-based Avangrid. Construction of Park City Wind will take place primarily out of Bridgeport.
Connecticut is counting on the two projects to meet its statutory goals to reduce carbon emissions by 2040, amid continued uncertainty over Dominion’s long-term plans for its two nuclear reactors. at Millstone Power Station in Waterford which supply a quarter of New England’s electricity.
Eversource CEO Joe Nolan says the decision to divest his stake in Revolution Wind was a simple economic matter – a federal auction in February for lease rights off Long Island and New Jersey reported $4.4 billion. This makes Eversource think it can make a bigger profit by selling its share of the project to offshore wind investors, rather than staying in the Revolution Wind partnership with Orsted.
“People have always asked us these questions, whether we’re going to monetize our wind assets,” Nolan said Thursday during a conference call with investment analysts. “If someone backs up a Brink’s truck, obviously we’ll look into that.”
Gov. Ned Lamont briefly addressed the decision Thursday at a news conference in Hartford, saying he plans to speak with Nolan.
“Orsted is a company that generates billions of dollars a year – they have the resources to do that,” Lamont said. “I liked the fact that we have a local partner at Eversource. I think there’s probably a bit of a trade-off – they’re looking at the value of their leases today versus what they paid. “
The state Department of Energy and Environmental Protection did not immediately respond to questions about potential regulatory insight that could accompany a divestment from Eversource. A Connecticut Public Utilities Regulatory Commission spokesperson referred the questions to DEEP.
Eversource spokesman Mitch Gross said the company “strongly” believes in the potential of offshore wind farms as a source of clean energy for New England, as well as a job generator. . He said the company had hired Goldman Sachs to help it weigh all the offers, with the possibility of it sticking with the project in the end.
“Proceeds from any potential sale would be used for major investments to support clean energy development and strengthen our grid to support widespread electrification,” Gross said by email. “We’ll see what kind of interest and offers we get and go from there.”
In February, the federal Office of Oceans Management held its first offshore lease auction for New York Bay, and Avangrid was among the bidders. Through its subsidiary Avangrid Renewables, the company is one of the largest operators of solar and wind farms in the United States.
In addition to Revolution Wind off the coast of Rhode Island, Orsted and Eversource sued South Fork Wind, east of Montauk Point, to supply power to New York’s Long Island Power Authority; and Sunrise Wind, off the Jersey Shore. The companies own 273 square miles of additional lease rights off the coast of Massachusetts.
In a conference call two weeks ago, Orsted executives said they had made a “final investment decision” with Eversource on Revolution Wind.
Orsted gave no indication during the April call that Eversource might consider alternatives for its own 50-50 stake in the project. But CEO Mads Nipper said his company was bracing for what he called “bottlenecks and inflationary pressures” to its US projects that could squeeze deadlines to complete them. He said Orsted had already blocked the vast majority of steel purchases needed to build the North East wind farms.
“We’re not seeing the value creation that we had been aiming for,” Nipper said in April. “We continue to look for levers to help improve the business case.”
Gross said inflationary pressure played no role in Eversource’s decision to consider a sale.
Orsted owns the Block Island Wind Farm, which was the first offshore grid in the United States, with five turbines supplying electricity to some 1,800 homes on the island, many of which are summer residences.
Located slightly south of the midpoint between Block Island and Martha’s Vineyard, Revolution Wind would be much larger, supplying Connecticut with just over 300 megawatts of electricity under optimum wind conditions – enough for about 150,000 homes – with 400 megawatts towards Rhode Island.
DEEP’s goal is for onshore battery farms to provide a steady flow of power during periods of lighter wind. Batteries could also be harnessed to mitigate the impact of any spike in the cost of electricity produced by natural gas-fired power plants. Prices jumped this year during the Russian-Ukrainian conflict.
Dan Haar contributed to this report. Includes earlier reports by Luther Turmelle.