Eversource Energy completed its sale of an uncommitted lease area of approximately 175,000 developable acres offshore Massachusetts to Ørsted.

Ørsted agreed to pay $625 million cash for the lease area 25 miles off the south coast of Massachusetts. The transaction, initially announced on May 25, closed following approval by the Committee on Foreign Investment in the U.S., the company said in a Sept. 7 press release.

Eversource also has determined that it is “in the best long-term interest of the company” to advance the sale of its existing 50% interest in three jointly owned contracted offshore wind projects: South Fork Wind, Revolution Wind and Sunrise Wind. The projects have a total capacity of 1,758 megawatts. The decision to sell was made after a strategic review of its offshore wind portfolio.

Eversource expects to announce details of a transaction soon, according to a news release. Eversource has engaged Goldman Sachs as its financial adviser to assist with the transactions. Ropes & Gray serves as its legal counsel.

“Eversource is fully committed to being a catalyst to the region’s clean energy transition, with our regulated companies procuring power from offshore wind as well as building many of the facilities that will enable more than 9,000 megawatts of offshore wind generation to reach the homes and businesses of Southern New England. We share the same goals as the states in which we operate when it comes to building the clean energy delivery systems of the future,” said Joe Nolan, Eversource’s president, CEO and chairman. “With Ørsted as the 100% owner of this lease area, we are confident it will play a critical role in decarbonizing the generation mix of southern New England and New York.”

In conjunction with the offshore Massachusetts transaction, Eversource and Ørsted additionally announced the execution of a Tax Equity Capital Contribution Agreement for South Fork Wind.

Eversource will use a portion of the proceeds from the lease area sale to provide its anticipated tax equity investment for South Fork Wind. The contribution for Eversource’s new tax equity member interest is expected to be approximately $545 million. Eversource expects to recover this tax equity member interest investment primarily in the form of investment tax credits as turbines are placed in service for the offshore New York project.

The credits will be utilized to reduce federal tax liability, including refunds expected over the next nine months. Eversource also expects to receive approximately $273 million of this contribution as a distribution from the project prior to its commercial operations date.

Construction of South Fork Wind commenced in early 2022, with commercial operation expected in late 2023. Eversource’s tax equity investment in South Fork Wind is expected to close in the third quarter.

Offshore