Denmark’s Ørsted A/S (CPH:ORSTED) today said it has agreed to buy Deepwater Wind in a deal that will create the largest US offshore wind platform with a 8.8-GW portfolio of under-development and potential projects.
The Danish energy company will purchase 100% of Rhode Island-based Deepwater Wind from the DE Shaw Group for USD 510 million (EUR 443m), thus taking its operational and potential project capacity totalling around 3.3 GW. The target portfolio includes: the 30-MW Block Island wind farm, the US’ first and only operating offshore wind park, switched on at end-2016; three projects with long-term revenue contracts, in place or pending completion, in Rhode Island, Connecticut, Maryland and New York with a combined capacity of 810 MW; and around 2.5 GW of potential projects in offshore wind lease areas in Massachusetts and Delaware.
“We expect the acquisition to deliver a healthy value creation spread on top of our cost of capital, with additional significant strategic upside,” Ørsted said in the press release. The combined entity will be named Ørsted US Offshore Wind, with closing of the transaction expected to occur by end-2018.
DEEPWATER WIND’S ASSETS AND ACTIVITIES
The target business currently owns development projects with under-negotiation or concluded revenue contracts for the Revolution wind project between New York and Martha’s Vineyard in Massachusetts that will supply 400 MW of wind power to Rhode Island and 200 MW to Connecticut. The wind park is planned to be commissioned in 2023.
The US firm is also developing the 120-MW Skipjack wind project off the coast of Maryland and the 90-MW Southfork wind park off Long Island, within a federal lease area off Massachusetts. Both of them are expected to be switched on by end-2022.
Meanwhile, the company’s future development pipeline features 1.2 GW of potential wind projects off Delaware and New Jersey as part of a 50/50 joint venture with Public Service Enterprise Group Inc (NYSE:PEG). It also holds the rights to two federal wind lease areas off New England with the potential to accommodate around 1.3 GW of wind turbine capacity.
ØRSTED IN THE US
The acquisition will expand Ørsted’s 5.5-GW offshore wind portfolio in the US that incorporates development rights for the up to 2-GW Bay State wind farm of Massachusetts, held in partnership with Eversource Energy (NYSE:ES), rights for up to 3.5 GW at the Ocean Wind site off New Jersey and a 12-MW offshore wind project in Virginia, which is a joint initiative with Dominion Energy Virginia. The company also has exclusive rights with Dominion Energy to discuss the potential development of up to 2 GW of offshore wind capacity, it said.
The Danish firm noted that the acquisition will not affect its 2018 forecast for earnings before interest, tax, depreciation and amortisation (EBITDA), while it lifts its capex guidance range to DKK 23 billion (USD 3.5bn/EUR 3.1bn)-25 billion from DKK 16 billion-18 billion.
(USD 1.0 = EUR 0.869)
(DKK 1.0 = USD 0.154/EUR 0.134)
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Walney Extension turbines at sunset. Source: Ørsted A/S
