Ørsted sells stake in near-1GW US onshore wind portfolio for £300 million
Ørsted sells stake in near-1GW US onshore wind portfolio for £300 million | Windpower Monthly
Ørsted is divesting an equity ownership stake in four US onshore wind farms, totalling 957MW, to infrastructure investment firm Stonepeak.
The $300 million transaction is the second major divestment of multiple assets in the US by Ørsted under its ‘farm-down’ programme, following a similar dea l with Energy Capital Partners in 2022.
The developer said it had previously raised around $700 million in tax equity proceeds for the 975MW portfolio, bringing the total proceeds raised to abound $1 billion.
The four operational wind farms have power purchase agreements in place for all or parts of their production capacity. They are spread across three states: The Ford Ridge Wind project in Illinois, the Helena Wind and Western Trail Wind projects in Texas, and the Sunflower Wind project in Kansas.
Headquartered in New York, Stonepeak – which also recently agreed a $2.6 billion deal with Dominion Energy for 50% of the 2.6GW-plus Coastal Virginia Offshore Wind in the US – will receive 80% of the cash distributions associated with the Ørsted projects, while the Danish developer will continue to operate the assets.
This is Ørsted’s first partnership with Stonepeak. While structured differently, the transaction broadly corresponds to Ørsted’s historical farm-down approach, in which ownership shares of existing operating assets are divested in order to redeploy capital for future value-creating projects. The partnership structure allows the firm to maximise capital redeployment while also retaining operational decision-making and long-term optionality around the portfolio.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.