Eversource announced an after-tax impairment charge of $331 million related to the sale of its offshore wind assets in its quarterly earnings call Tuesday.
Eversource CFO John Moreira said the impairment “will not have any impact on our cash flows and operations” but noted that the impairment charge could be significantly larger if Eversource is unsuccessful in repricing the Sunrise Wind contract with the New York State Energy Research and Development Authority, or if the Revolution Wind and Sunrise Wind projects do not qualify for investment tax credit adders. (See OSW Developers Seeking More Money from New York.)
Moreira estimated these two issues could cost the company an extra $400 million each but said the company is confident it will avoid those costs.
“We have included both of those components in our impairment analysis, and obviously for us to be in a position to do that, there needs to be a certain level of conviction and probability, and on both of those we feel very good,” Moriera said.
The $331 million impairment charge amounted to $0.95 per share and contributed to reduced second-quarter earnings of $0.04 per share compared to $0.84 per share in the second quarter of 2022. It largely offset increased earnings in Eversource’s electric transmission and distribution businesses.
Eversource previously partnered with the world’s largest offshore wind developer, Denmark’s Ørsted, to pursue projects off the Northeast U.S. coast, but has decided to exit the partnership and the offshore wind business altogether.
The company completed the sale of its uncommitted lease area to Ørsted in May for $625 million and said it is “near the goal line” on the sale of its stake in the South Fork Wind, Revolution Wind and Sunrise Wind development projects. (See Eversource Begins Its Exit from OSW Development.)
The costs and in-service dates for these projects have not changed since May of this year, and about 93% of the costs of the three projects are locked in, Eversource said. The in-service dates range from late 2023 for South Fork Wind to late 2025 for Sunrise Wind.
Eversource CEO Joe Nolan said the company remains committed to clean energy and still sees offshore wind as a key resource for the region despite the recent setbacks.
“We feel very strongly that wind is going to play a major role as we transition to this clean energy environment,” Nolan said. “I don’t see anyone taking their foot off the gas. The policymakers are very excited about wind, so I really don’t see that waning.”
He added that Eversource is focused on making the necessary infrastructure improvements to enable the clean energy transition.
“We continue to emphasize the need for system investments to support increased electrification and distributed generation to help ease the current reliance on natural gas generation in the region,” Nolan said.
