Orsted to earn $300m from US onshore wind farm stake sales

Embattled Danish utility Orsted will earn $300m from the sale of an equity ownership stake in four US wind farms with a combined capacity of 957MW to alternative infrastructure investment firm Stonepeak.

Orsted said it has previously raised about $700m in tax equity proceeds for the portfolio of wind farms in Texas, Illinois, and Kansas, bringing the total proceeds raised to approximately $1bn.

Under the agreement signed, Stonepeak will receive 80% of the cash distributions associated with the projects, while Orsted will continue to operate the wind farms.

“This deal signifies the value that our US onshore renewable energy projects can deliver to our investors while also demonstrating the holistic and flexible approach we take to partnerships and divestments,” said David Hardy, CEO of the Americas region at Orsted.

“While Orsted will continue to operate each asset over its lifetime, we’ll use this capital to fund projects that continue to create the most value for our stakeholders and fuel our growth in the renewable energy sector.”

The farm-down of multiple onshore wind assets in the US comes as the company has been under substantial financial pressure after massive provisions for cancellation fees related to a decision to halt development of its Ocean Wind offshore wind developments in the US.

As part of the transaction with Stonepeak, Orsted retains a unilateral call option for the investment firm’s interests that can be exercised under certain circumstances after the closing of the transaction.

While structured differently, the transaction broadly corresponds to Orsted’s historical farm-down approach, in which ownership shares of existing operating assets are divested to recycle and redeploy capital for future value-creating projects, the utility said.

Orsted stressed that the unique partnership structure allows it to maximise capital redeployment while also retaining operational decision-making and long-term optionality around the portfolio.

“Orsted’s US onshore assets are young and have been built with trusted technology, which gives us confidence in their potential to make a meaningful and positive long-term impact on the communities they serve,” said Anthony Borreca, senior managing director at Stonepeak.

The portfolio consists of the Ford Ridge Wind project in Illinois, the Helena Wind and Western Trail Wind projects in Texas, and the Sunflower Wind project in Kansas. All are already operational and have power purchase agreements (PPAs) in place.

The projects are all currently operational and have power purchase agreements in place for all or parts of the production capacity.