Avangrid Announces Agreement for Sale of Kitty Hawk North Offshore Lease Area to Dominion Energy

Rhea-AI Summary

Avangrid (NYSE: AGR) has agreed to sell its Kitty Hawk North offshore wind lease area to Dominion Energy for approximately $160 million.

The 40,000-acre lease area can support 800 MW of offshore wind generation. This transaction, expected to close in Q4 2024, includes a lease acquisition payment of $117 million and additional development cost reimbursement. Avangrid will retain the Kitty Hawk South lease, which has the potential to deliver up to 2.4 GW of power.

This sale will provide Avangrid with significant capital for reinvestment in other renewable projects, including the under-construction Vineyard Wind 1 and the New England Wind lease area.

Positive

• Avangrid secures $160 million from the sale of the Kitty Hawk North lease area, boosting capital for other projects.
• The transaction supports Avangrid's strategic focus on its Vineyard Wind 1 project and various onshore and offshore renewable projects.
• Retention of Kitty Hawk South lease area, which has the potential to deliver 2.4 GW of power.

Negative

• None.

Insights

Financial Analyst

The sale of the Kitty Hawk North offshore wind lease area for $160 million provides a significant capital boost to Avangrid. This transaction will likely improve their liquidity position and offers a strategic shift towards more focused investment in their ongoing projects like Vineyard Wind 1 and Kitty Hawk South. A sale price of $3,000 per acre is a notable valuation, indicating strong demand and potential profitability in the offshore wind market. Investors may see this as a prudent move, reallocating resources from a single asset to bolster a broader portfolio. However, the final impact will be contingent on the effective reinvestment of these proceeds.

In the short term, the completion of this sale by Q4 2024 may positively impact Avangrid’s balance sheet, enhancing financial flexibility. Long-term effects depend largely on the success of Avangrid's ongoing and future projects. The retention of rights to Kitty Hawk South, with a capacity of up to 2.4 Gigawatts, remains a strong growth avenue.

Market Research Analyst

This transaction marks a notable shift in the offshore wind market, illustrating increasing transactions and collaborations between major energy companies. Dominion Energy's acquisition suggests confidence in offshore wind's future viability, possibly fostering further market consolidation. For Avangrid, this sale accelerates their strategy to concentrate on more advanced projects. The market might view this as Avangrid's attempt to leverage already-developed assets to fund future growth, which could be seen favorably by investors.

This move also highlights a significant trend in renewable energy investments, which are not just environmentally driven but increasingly financially lucrative. This could drive more retail investors towards renewable energy stocks, seeking both growth potential and long-term sustainability.

40,000 acre lease area could support 800 MW of offshore wind generation energy

Transaction value of approximately $160 million expected to close in fourth quarter of 2024

BOSTON--(BUSINESS WIRE)-- Avangrid, Inc. (NYSE: AGR), a leading sustainable energy company and member of the Iberdrola Group, today announced an agreement for the sale of the Kitty Hawk North offshore wind lease area to Dominion Energy. The agreement, which includes the Kitty Hawk North offshore wind lease area and associated assets, is for a sale of approximately $160 million, inclusive of a payment of about $3,000 per acre for the nearly 40,000-acre lease. The sale price consists of a lease acquisition payment of $117 million and associated development cost reimbursement to Avangrid.

“As Avangrid continues the construction of our nation-leading Vineyard Wind 1 project and the development of our diverse portfolio of offshore and onshore renewable projects, this transaction advances our strategic priorities by providing significant capital infusion for reinvestment,” said Avangrid CEO Pedro Azagra. “Executing this agreement allows us to move forward with our long-term plans for the development of Kitty Hawk South, further demonstrating our commitment to accelerating the clean energy transition in the United States.”

Avangrid retains the ownership and associated rights to the Kitty Hawk South lease, and will continue the development of the area, which has the potential to deliver up to 2.4 Gigawatts of power to North Carolina, Virginia, or other states or private companies.

As one of the largest renewable energy developers in the nation, Avangrid has an 8.8 Gigawatt portfolio of more than 75 wind and solar facilities in 25 states, generating enough energy to power over 2.8 million homes across the country.

Avangrid is building the nation’s first large-scale offshore wind project, Vineyard Wind 1, currently under construction 15 miles south of Martha’s Vineyard. On June 26, 2024, Avangrid announced that it has placed 10 turbines into production for the project, making Vineyard Wind 1 the largest operating offshore wind farm in the U.S.

Avangrid is also developing the New England Wind lease area, which received a favorable Record of Decision from the Department of the Interior in April 2024, followed by the approval of its Construction and Operations Plan in July 2024.

In March 2024, Avangrid submitted multiple proposals for the New England Wind projects to the Massachusetts-Rhode Island-Connecticut Multi-State Procurement for Offshore Wind. The states are anticipated to announce selected projects from the competitive procurement in August 2024.

About Avangrid: Avangrid, Inc. (NYSE: AGR) aspires to be the leading sustainable energy company in the United States. Headquartered in Orange, CT with approximately $45 billion in assets and operations in 24 U.S. states, Avangrid has two primary lines of business: networks and renewables. Through its networks business, Avangrid owns and operates eight electric and natural gas utilities, serving more than 3.3 million customers in New York and New England. Through its renewables business, Avangrid owns and operates a portfolio of renewable energy generation facilities across the United States. Avangrid employs approximately 8,000 people and has been recognized by JUST Capital as one of the JUST 100 companies – a ranking of America’s best corporate citizens – in 2024 for the fourth consecutive year. In 2024, Avangrid ranked first among utilities and 12 overall. The company supports the U.N.’s Sustainable Development Goals and was named among the World’s Most Ethical Companies in 2024 for the sixth consecutive year by the Ethisphere Institute. Avangrid is a member of the group of companies controlled by Iberdrola, S.A. For more information, visit www.avangrid.com.

Forward-Looking Statements

Certain statements in this report may relate to our future business and financial performance and future events or developments involving us and our subsidiaries that are not purely historical and may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “should,” “would,” “could,” “can,” “expect(s),” “believe(s),” “anticipate(s),” “intend(s),” “plan(s),” “estimate(s),” “project(s),” “assume(s),” “guide(s),” “target(s),” “forecast(s),” “are (is) confident that” and “seek(s)” or the negative of such terms or other variations on such terms or comparable terminology. These forward-looking statements generally include statements regarding the potential transaction Avangrid and Dominion Energy, including any statements regarding the expected timetable for completing the potential transaction, the ability to complete the potential transaction, the expected benefits of the potential transaction, the continued development of Kitty Hawk South and its estimated future capacity, Avangrid’s total generation capacity, the operating status and future capacity of Vineyard Wind 1, the development of the New England Wind lease area, and any other statements regarding Avangrid’s future expectations, beliefs, plans, objectives, results of operations, financial condition and cash flows, or future events or performance. Readers are cautioned that all forward-looking statements are based upon current reasonable beliefs, expectations and assumptions and may influenced by many factors, which are often beyond Avangrid’s control, that can cause actual results to differ from those expressed or implied by the forward-looking statements. For a discussion of risk factors and other important factors affecting forward-looking statements, please see Avangrid’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filings and the information filed on Avangrid’s Forms 8-K with the SEC as well as its subsequent SEC filings, and the risks and uncertainties related to the proposed transaction, including, but not limited to: the expected timing and likelihood of completion of the proposed transaction, including the timing, receipt and terms and conditions of any regulatory approvals of the proposed transaction or other third-party consents or approvals, the ability of Avangrid and Dominion Energy to satisfy other conditions to closing, timely performance by third parties under existing or future contracts, or the occurrence of severe weather events. Other unpredictable or unknown factors not discussed in this communication could also have material adverse effects on forward-looking statements. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may vary in material respects from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements. Avangrid does not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of this report, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. Other risk factors are detailed from time to time in Avangrid’s reports filed with the SEC and we encourage you to consult such disclosures.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240708565722/en/

Media:

Kimberly Harriman

(203) 203-4481

Kimberly.Harriman@avangrid.com

Source: AVANGRID, Inc.

FAQ

What is the value of the Kitty Hawk North offshore wind lease area sale by Avangrid?

The sale value is approximately $160 million.

When is the sale of the Kitty Hawk North lease area expected to close?

The transaction is expected to close in the fourth quarter of 2024.

How many acres is the Kitty Hawk North offshore wind lease area?

The lease area is nearly 40,000 acres.

What is the potential power generation capacity of the Kitty Hawk North lease area?

The area can support up to 800 MW of offshore wind generation.

What is the stock symbol for Avangrid?

The stock symbol for Avangrid is AGR.

What will Avangrid do with the capital from the sale of the Kitty Hawk North lease area?

Avangrid will reinvest the capital in other renewable energy projects, including the Vineyard Wind 1 and the New England Wind lease area.

Does Avangrid retain any rights to the Kitty Hawk area after the sale?

Yes, Avangrid retains ownership and rights to the Kitty Hawk South lease area.

What is the potential power delivery capacity of the Kitty Hawk South lease area?

The Kitty Hawk South lease area has the potential to deliver up to 2.4 GW of power.