Eversource Energy expects to record a substantial impairment charge in the fourth quarter of 2023, primarily due to increased costs and uncertainties in its offshore wind projects. The company is also in advanced talks to divest its 50% ownership in three major offshore wind projects: South Fork Wind, Revolution Wind, and Sunrise Wind.
The anticipated impairment charge, in the range of $1.4 to $1.6bn, arises from revised project construction costs and supply chain constraints, particularly in installation vessels and foundation fabrication. These challenges have led to a significant decrease in the fair value of these projects, according to the company. Additionally, the denial of Sunrise Wind’s petition by the New York State Public Service Commission to amend its Offshore Renewable Energy Credit (OREC) contract has contributed to the impairment. This decision impacts Sunrise Wind’s involvement in New York’s renewable energy solicitation and necessitates renegotiation of the OREC agreement at a revised price, further contributing to the impairment expected to be in the range of $600m to $700m for Sunrise Wind alone.
Eversource is negotiating with a leading global private infrastructure investor to sell its stake in these projects. While the final terms are still under discussion, Eversource aims to promptly announce the details upon reaching a definitive agreement. This potential divestiture is subject to regulatory approvals and other conditions, including partnership agreements with Ørsted, Eversource’s joint venture partner.
Joe Nolan, Eversource’s Chairman, President, and Chief Executive Officer, commented on the challenges faced by the offshore wind industry, noting significant supply chain disruptions and inflationary pressures.
