Orsted, a Danish energy company, has reached an agreement to acquire Eversource Energy's 50% stake in an uncontracted federal offshore wind lease area jointly owned by the two companies. The deal encompasses the seabed, which is still in the early stages of development, as well as contracts and partnerships for crucial operational assets in the northeastern United States.
Valued at $625 million, this agreement reinforces Orsted's prominent position in the US offshore wind energy sector and underscores the company's dedication to establishing an American offshore wind industry. Orsted aims to create a supply chain that generates job opportunities nationwide while fostering innovation for the global market.
The lease area, known as Lease Area OCS-A 500 (Lease 500), covers around 187,000 acres of uncontracted seabed designated for offshore wind energy and has the potential capacity to generate up to 4GW. As part of the deal, Orsted will also gain control of contracts and leases for strategic port facilities and other assets. The company will assume full ownership of partnerships with the Port of Providence, the Port of Davisville, and Quonset Point in Rhode Island, as well as with Connecticut's New London State Pier. Additionally, Orsted will acquire complete ownership of the operations and maintenance hub in East Setauket, New York, and the charter agreement for the first American-built offshore wind service operation vessel, currently under construction at Edison Chouest's facility in Houma, Louisiana.
David Hardy, the Executive Vice President and Chief Executive of Region Americas at Orsted, expressed gratitude to Eversource for their six-year partnership and their expertise, which played a crucial role in advancing the onshore aspects of their three projects. He emphasized that this acquisition demonstrates Orsted's commitment to building a sustainable offshore wind energy industry in the US, while also highlighting the value creation opportunities the company sees in the American market. Hardy further stated that, in addition to assuming full ownership of the familiar seabed, Orsted will be the sole bidder in the active offshore wind solicitations for New York 3 and Rhode Island 2.
The agreement solidifies Lease 500 as a strategic asset within Orsted's US offshore wind portfolio. Its proximity to the company's existing projects enables construction and operational efficiencies, and the site benefits from shallow water depth and favorable wind conditions. Situated approximately 40km off the coast of southern New England, Lease 500 has the potential to serve multiple markets, including Massachusetts, Rhode Island, Connecticut, and New York.
Joe Nolan, the President, Chief Executive Officer, and Chairman of Eversource, praised Orsted's expertise and global leadership in the offshore wind sector, reflecting on the more than six years of collaboration between the two companies. Nolan expressed confidence that the offshore wind projects developed in their partnership's lease area, including the three currently under development, will play a crucial role in decarbonizing the energy generation mix in southern New England and New York.
Last year, Eversource announced a review of its offshore wind energy portfolio, considering the sale of related assets. Alongside the agreement to sell its uncontracted seabed and other interests to Orsted, Eversource concluded that divesting its existing 50% stake in the three jointly owned contracted offshore wind projects (South Fork Wind, Revolution Wind, and Sunrise Wind) aligns with the company's long-term interests.
As part of the agreement, Eversource will provide tax equity for the South Fork Wind project, a significant milestone as the project plans to commence operations and deliver renewable energy later this year. Eversource will continue supporting the onshore aspects of all three projects throughout the construction phase, ensuring the portfolio's long-term continuity and success.
The agreement is subject to customary closing conditions and regulatory review and is expected to be finalized in the third quarter of 2023.