Orsted A/S (CPH:ORSTED) agreed to buy out its joint venture partner in a New York offshore wind farm after abandoning two New Jersey projects last year and taking $4 billion in impairment charges.
The move shows the Danish green energy giant is still looking to grow in the nascent American offshore wind market, despite rising costs that have seen developers cancel or delay projects off the Atlantic coast. Investors are waiting for an update from Orsted early next month on how it plans to recover from a series of costly setbacks last year, mostly in its US division.
Orsted didn’t provide a price for the 50% stake in the 924-megawatt Sunrise Wind project it agreed to acquire from Eversource Energy, according to a statement Wednesday. The agreement is contingent on the project winning a contract to deliver power in a New York auction.
Shares in Orsted fell as much as 2% in early trading in Copenhagen, before paring losses to trade at around 380 Danish krone.
“Buying out Eversource and funding 100% of Sunrise Wind capex would put further pressure on Orsted’s credit metrics,” said Ahmed Farman, an analyst at Jefferies, in an emailed note. “It will also increase Orsted’s exposure to offshore wind on the northeast coast of the US, where it has struggled in the past.”
Eversource is also seeking to sell its 50% stake in two other wind farm projects it’s developing with Orsted: Revolution, south of Rhode Island, and South Fork, east of Long Island.
The Danish company said it remains committed to the region.
“The northeast is an increasing priority for Orsted,” said David Hardy, the company’s chief executive officer for the Americas. “We’re building a future offshore wind hub that is strategic for Sunrise Wind.”
Offshore wind developers in the US are facing challenges from rising costs. Orsted recorded $4 billion in impairment charges from canceling two projects in New Jersey last year, while Eversource said this month it’s taking an impairment charge of as much as $1.6 billion for its three projects.
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