Eversource (NYSE:ES) last week began its anticipated departure from the offshore wind sector, announcing it would sell its interest in an uncontracted New England lease area to its development partner, Ørsted.

Eversource also said it would soon announce sale of its share of three other offshore projects that are farther along in the development process: South Fork Wind, Revolution Wind and Sunrise Wind. Ørsted holds a 50% stake in those projects as well.

The two companies — New England’s largest utility and the world’s largest offshore wind developer — teamed up six years ago to pursue a share of the clean energy production planned off the shores of New York and New England.

Their 132 MW South Fork Wind project south of Rhode Island is expected to start producing electricity this year. It will earn the distinction of being the first utility-scale offshore wind farm in the U.S. unless nearby Vineyard Wind 1 crosses the finish line first. Both started construction last year, but Vineyard is much larger than South Fork, at 800 MW.

Details

Eversource indicated last year that it was looking for an exit from the offshore wind business. CEO Joe Nolan told financial analysts this month that negotiations were nearing completion.

The company will fully exit the development space, but it expects to have a role in transmission of the offshore power generated by Ørsted, he said.

Eversource said Thursday it will sell its 50% stake to Ørsted for $625 million in cash, some of which Eversource will use to provide tax equity for the South Fork Wind project through a new tax equity ownership interest. Eversource will recover that investment through tax credits received around the time of the wind farm’s commercial operations date.

As part of the deal, Ørsted will gain full ownership of partnerships with Quonset Point, the Port of Providence and the Port of Davisville, all in Rhode Island, and the New London State Pier in Connecticut; ownership of the operations and maintenance hub in East Setauket, N.Y.; and the charter agreement for the offshore wind service operations vessel being built in Louisiana.

Eversource said Thursday it expects to announce sale of its share of Revolution, South Fork and Sunrise by the end of June.

Based on the prices being negotiated and on the value of its aggregate investment to date in offshore wind development, Eversource expects the transactions to result in a second-quarter after-tax impairment charge of $220 million to $280 million.

It said it would use net proceeds from the transactions for debt reduction.

The sale to Ørsted is subject to approval by The Committee on Foreign Investment in the United States.

The transaction announced Thursday entails Lease Area OCS-A 0500, known as Bay State Wind. The 187,000-acre tract of federal waters south of the Massachusetts islands of Martha’s Vineyard has a potential capacity of up to 4 GW of wind power.

Ørsted and Eversource as Bay State Wind LLC have submitted proposals for projects they called Sunrise Wind 2 and Revolution Wind 2 in the most recent offshore wind solicitations by New York and Rhode Island, respectively.

No contracts have been awarded yet in either solicitation.

Ørsted said it would continue as the sole bidder on both.