Eversource Energy Closes on the Sale of Sunrise Wind

Rhea-AI Summary

Eversource Energy (NYSE: ES) has completed the sale of its 50% stake in the 924 MW Sunrise Wind project to Ørsted for $230 million, subject to spending adjustments. The payment structure involves 50% at closing and the rest upon achieving construction milestones. The sale was contingent upon the project's successful award under NYSERDA's fourth solicitation for Offshore Wind Renewable Energy Certificates, which was completed on May 31, 2024. Regulatory approvals were obtained from the Federal Energy Regulatory Commission and the New York State Public Service Commission in June 2024. Eversource has divested all ownership in Sunrise Wind and will no longer bear any financial obligations for the project. They will continue to be involved as a service provider for the onshore construction through a separate agreement.

Positive

• Eversource received $230 million from the sale of its 50% stake in Sunrise Wind.
• The deal eliminates Eversource's financial obligations related to Sunrise Wind.

Negative

• The remaining balance of the sale is contingent upon achieving construction milestones, introducing some uncertainty.

Insights

Financial Analyst

The sale of Eversource Energy's 50% ownership stake in Sunrise Wind to Ørsted for $230 million represents a significant financial move. The immediate influx of capital, with 50% paid at closing and the balance upon reaching specific construction milestones, bolsters Eversource's cash reserves. This transaction also removes Eversource's ongoing financial obligations associated with the Sunrise Wind project, which can be a strategic benefit in terms of risk management.

From a financial standpoint, divesting from the offshore wind project could be seen as a maneuver to refocus capital and resources towards more immediate or profitable ventures. Investors should view this positively in the short term due to the liquidity boost. However, the long-term implications depend on how effectively Eversource reallocates these funds.

It's important for retail investors to consider that the renewable energy sector is growing and this divestment might also signify a strategic shift in Eversource's future investment priorities. The cash obtained might be planned for reinvestment into other high-growth areas or used to strengthen their core business operations.

Market Research Analyst

In terms of market dynamics, the divestiture allows Eversource to transition from an ownership role to a service provider through a construction management agreement. This shift in role indicates that while relinquishing ownership, Eversource still sees value in leveraging its expertise in onshore construction. This strategic move can maintain their presence in the renewable energy market without the capital-intensive commitment of ownership.

The broader offshore wind market is expanding rapidly, supported by policies like NYSERDA's Renewable Energy Certificates. Eversource's decision to sell might reflect a strategic response to market conditions, recognizing that Ørsted, a leading player in offshore wind, is better positioned to handle the risks and complexities of such large-scale projects.

Additionally, retail investors should note that Eversource's continuous involvement in the project through the construction agreement means they will still benefit from the renewable energy trend without the associated financial risks, potentially a smart market positioning strategy.

Energy Sector Expert

This transaction underscores the complexities and strategic considerations within the energy sector, especially as companies balance between ownership of renewable assets and service provision. Eversource's sale to Ørsted, a company with significant expertise in offshore wind, indicates a trend where regional energy firms might prefer partnerships over direct ownership.

For the industry, this sale is indicative of a maturation phase where projects might increasingly see ownership changes that align with companies' core competencies. Ørsted’s acquisition is likely to enhance their portfolio, reinforcing their status as a leader in the offshore wind market.

Investors should understand that such moves can help Eversource streamline their operational focus while playing to their strengths in transmission and onshore construction. This can lead to more specialized and efficient operations, potentially translating to better long-term performance.

BOSTON & HARTFORD, Conn.--(BUSINESS WIRE)-- Eversource Energy (NYSE: ES) today announced that it has completed the sale of its 50 percent ownership share in the 924-megawatt Sunrise Wind project (Sunrise Wind) to Ørsted. Gross proceeds of the transaction are $230 million, subject to spending adjustments between signing and closing, with 50% due at closing and the remaining balance paid upon the achievement of certain construction milestones.

On January 24, 2024, Eversource Energy (Eversource) announced that it had reached an agreement to sell its 50 percent interest in Sunrise Wind to Ørsted, contingent on – among other things – the project’s successful award under the fourth New York State Energy Research and Development Authority (NYSERDA) solicitation for Offshore Wind Renewable Energy Certificates. Sunrise Wind was subsequently awarded a contract by NYSERDA, which was finalized and completed on May 31, 2024. In June 2024 the sale was approved by both the Federal Energy Regulatory Commission and the New York State Public Service Commission.

With the completion of the sale, Eversource has now divested all of its ownership interests in Sunrise Wind and will have no ongoing financial obligations associated with the project costs of Sunrise Wind.

Eversource has entered into a separate amended and restated construction management agreement with Sunrise Wind to lead the onshore construction for the project. In this role, Eversource will solely be a service provider to Sunrise Wind.

“We’re proud of the role we’ve played to advance Sunrise Wind to this point and are pleased that completing the sale of our ownership share will allow it to continue its progress,” said Eversource Chairman, President and Chief Executive Officer Joe Nolan. “Offshore wind spurs economic development, job creation, and emissions reductions, and we look forward to conducting our onshore work to help make this important clean energy project a reality, as well as continuing to leverage our transmission expertise to help enable the continued development of this important renewable resource for our region.”

Eversource engaged Goldman Sachs as its financial advisor to assist with the sale. Ropes & Gray LLP served as its legal counsel.

Eversource Energy operates New England’s largest energy delivery system and serves approximately 4.4 million electric, natural gas and water utility customers in Connecticut, Massachusetts, and New Hampshire.

This document includes statements concerning Eversource Energy’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts, including Eversource’s future onshore work, and the development of offshore wind in New England and the impacts of the Sunrise Wind and other offshore wind projects on the economy, pollution and public health. These statements are “forward-looking statements” within the meaning of U.S. federal securities laws. Generally, readers can identify these forward-looking statements through the use of words or phrases such as “estimate,” “expect,” “anticipate,” “intend,” “plan,” “project,” “believe,” “forecast,” “would,” “should,” “could” and other similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in the forward-looking statements. Forward-looking statements are based on the current expectations, estimates, assumptions or projections of management and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, the following important factors that may cause our actual results or outcomes to differ materially from those contained in our forward-looking statements, including, but not limited to: the ability to qualify for investment tax credits; variability in the costs and projected returns of the offshore wind projects and the risk of deterioration of market conditions in the offshore wind industry; cyberattacks or breaches, including those resulting in the compromise of the confidentiality of our proprietary information and the personal information of our customers; disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly; changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability; ability or inability to commence and complete our major strategic development projects and opportunities; acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our electric transmission and electric, natural gas, and water distribution systems; actions or inaction of local, state and federal regulatory, public policy and taxing bodies; substandard performance of third-party suppliers and service providers; fluctuations in weather patterns, including extreme weather due to climate change; changes in business conditions, which could include disruptive technology or development of alternative energy sources related to our current or future business model; contamination of, or disruption in, our water supplies; changes in levels or timing of capital expenditures; changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations; changes in accounting standards and financial reporting regulations; actions of rating agencies; and other presently unknown or unforeseen factors.

Other risk factors are detailed in Eversource Energy’s reports filed with the Securities and Exchange Commission (SEC). They are updated as necessary and available on Eversource Energy’s website at www.eversource.com and on the SEC’s website at www.sec.gov. All such factors are difficult to predict and contain uncertainties that may materially affect Eversource Energy’s actual results, many of which are beyond our control. You should not place undue reliance on the forward-looking statements, as each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, Eversource Energy undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240709572407/en/

William Hinkle (media)

(336) 682-8799

Matthew Fallon (investors)

(617) 548-3400

Source: Eversource Energy

FAQ

What was the sale amount for Eversource Energy's stake in Sunrise Wind?

Eversource Energy sold its 50% stake in Sunrise Wind to Ørsted for $230 million.

When did Eversource Energy complete the sale of Sunrise Wind?

Eversource Energy completed the sale on May 31, 2024.

What financial obligations does Eversource have post the sale of Sunrise Wind?

Eversource no longer has any financial obligations associated with Sunrise Wind post-sale.

What role will Eversource play in the Sunrise Wind project post-sale?

Eversource will act as a service provider for the onshore construction of Sunrise Wind.

What regulatory approvals were required for the sale of Sunrise Wind?

The sale required approvals from the Federal Energy Regulatory Commission and the New York State Public Service Commission.