The Danish company that wants to build a large-scale offshore wind farm 10 miles from Atlantic City has a deal to acquire competitor Deepwater Wind for $510 million, said its North American President Thomas Brostrøm.
The deal, if approved by federal regulators, would turn competitors for New Jersey subsidies for building the first 1,100 megawatts of offshore wind capacity into cooperators.
Deepwater also holds a federal lease to develop a wind farm that could serve New Jersey, Deepwater’s leader Jeff Grybowski said.
He will be co-CEO of the new company with Brostrøm.
The Deepwater lease is located south of Ørsted’s lease, equidistant to Maryland or Cape May, Grybowski said.
The deal would also create a single company with 10 offshore wind projects already in some stage of development in the Atlantic, including the U.S.’s first offshore wind farm, the five-turbine Block Island Wind Farm off Rhode Island.
Six are off New England; three off the Mid-Atlantic, including New Jersey; and one is off Virginia.
The new company would be able to provide wind energy to seven states along the East Coast that have committed to build offshore capacity of 10 gigawatts by 2030.
And there will be more bidding to come in New Jersey.
Gov. Phil Murphy recently directed the Board of Public Utilities to open two additional 1,200-megawatt solicitations of offshore wind capacity — one in 2020 and another in 2022. The goal is to build 3,500 megawatts of capacity by 2030, the highest goal so far for any state.
Brostrøm announced the move Monday morning. The North American company will now be called Ørsted US Offshore Wind.
Deepwater and Ørsted will move ahead independently to apply for New Jersey Offshore Wind Renewable Energy Credits, the two co-CEOs said.
“Jeff and I and the management team need a little time to figure out how to best utilize our efforts,” said Brostrøm. “We haven’t had a chance to think about it now. Obviously there will be synergies, but for now we remain two separate applications.”
Deepwater’s potential wind farm in the U.S. has a total capacity of about 3.3 gigawatts, and Ørsted’s portfolio has a total capacity of about 5.5 gigawatts, according to Ørsted.
The transaction must be approved by U.S. regulators, and a decision is expected by the end of the year, Brostrøm said. Until then, the two original companies will continue to operate separately, and each is applying to the New Jersey Board of Public Utilities for ratepayer subsidy of wind farm construction.
The BPU has opened the bidding for companies to supply the first 1,100 megawatts of offshore wind energy subsidized by the state, and applications are due by the end of the year. A decision is expected by next summer, in time for developers to qualify for 2019 federal tax credits, according to the BPU.
The federal credits are due to end at the end of next year.
Ratepayers will finance the construction of offshore wind farms through an add-on to their monthly bills, awarded as ORECS to developers in the competitive process.
Deepwater was owned by the D.E. Shaw Group, with which Ørsted made the deal.
Ørsted has built more than 20 large-scale offshore wind farms in Europe and smaller numbers in Asia.
“Deepwater Wind has done a fantastic job as a first-mover in US offshore wind, and I look forward to joining and integrating the two US organizations,” said Brostrøm.
The new organization will be represented by a management team headed by CEO Brostrøm; Grybowski; President and CFO David Hang, both from the Deepwater Wind team; and COO Claus Bøjle Møller from the Ørsted team.
Headquartered in Denmark, Ørsted employs 5,700 people.