Eversource Energy is soliciting buyers for its share of the long-planned Revolution Wind offshore energy project.
Revolution Wind is one of two major wind farms planned off the southern New England coast that would generate electricity for Connecticut. The other project is the Park City Wind farm in the works by Orange-based Avangrid. Park City Wind construction will be staged primarily out of Bridgeport.
Connecticut is counting on both projects to meet statutory goals it has set to cut carbon emissions by 2040, amid continuing uncertainty over Dominion’s long-term plans for its two nuclear reactors at Millstone Power Station in Waterford that supply a quarter of New England’s electricity.
Eversource CEO Joe Nolan said the decision to divest its share in Revolution Wind was simple economics – a federal auction in February for lease rights off Long Island and New Jersey brought in a $4.4 billion haul. That has Eversource thinking it can generate a bigger profit by selling its share of the project to offshore wind investors, rather than staying in the Revolution Wind partnership with Orsted.
“Folks have always asked us these questions, about are we going to monetize our wind assets,” Nolan said Thursday during a conference call with investment analysts. “If somebody backs up a Brink’s truck, obviously we will look at that.”
Gov. Ned Lamont addressed the decision briefly on Thursday during a news conference in Hartford, saying he planned to speak with Nolan.
“Orsted is a billions-of-dollars-a-year company – they’ve got the resources to do this,” Lamont said. “I liked the fact that we had a local partner in Eversource there. I think there’s probably a little bit of a trade – they’re looking at the value of their leases today compared to what they paid.”
The state Department of Energy and Environmental Protection did not immediately respond to questions about potential regulatory overview that might accompany an Eversource divestment. A spokesperson with the Connecticut Public Utilities Regulatory Commission referred questions to DEEP.
Eversource spokesperson Mitch Gross said the company believes “strongly” in the potential of offshore wind farms as a source of clean energy for New England, as well as a jobs generator. He said the company has hired Goldman Sachs to help it weigh any offers, with the possibility it might stick 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 stated via email. “We’ll see what kind of interest and offers we get and will go from there.”
In February, the federal Bureau of Ocean Management held its first auction of off-shore leases for the New York Bight and Avangrid was among the bidders. Through its Avangrid Renewables subsidiary, the company is one of the largest operators of solar and wind farms in the United States.
In addition to Revolution Wind off the Rhode Island coast, Orsted and Eversource have been pursuing South Fork Wind, east of Montauk Point to provide power to New York’s Long Island Power Authority; and Sunrise Wind, off the New Jersey coast. The companies own 273 square miles of additional lease rights off the Massachusetts coast.
In a conference call two weeks ago, Orsted executives said they reached a “final investment decision” with Eversource on Revolution Wind.
Orsted gave no indication on the April call that Eversource might be considering alternatives for its own 50-50 stake in the project. But CEO Mads Nipper said his company is bracing for what he called “bottlenecks and inflationary pressures” for its U.S. projects that could pressure timelines to complete them. He said Orsted has already locked in the vast majority of steel purchases required to build the Northeast wind farms.
“We are not seeing the value creation we had aimed for,” Nipper said in April. “We continue to look for levers to help improve the business case.”
Gross stated the inflationary pressure played no part in Eversource’s decision to consider a sale.
Orsted owns the Block Island Wind Farm that was the first offshore array in the United States, with five turbines supplying power to some 1,800 houses on the island, many of them summer getaway homes.
Sited slightly south of the midway point between Block Island and Martha’s Vineyard, Revolution Wind would be far larger, supplying Connecticut with just over 300 megawatts of electricity during optimal wind conditions – sufficient for about 150,000 homes – with 400 megawatts heading to Rhode Island.
DEEP’s goal is for battery farms on shore to provide a steady flow of power during periods of lighter wind. Batteries could also be tapped to lessen the sting of any spikes in the cost of electricity produced by power plants fueled by natural gas. Prices have surged this year during the Russia-Ukraine conflict.
Dan Haar contributed to this report. Includes prior reporting by Luther Turmelle.
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