Equinor has entered right into a swap transaction with bp, underneath which Equinor will take full possession of the Empire Wind lease and initiatives and bp will take full possession of the Beacon Wind lease and initiatives.
Underneath the settlement, Equinor will take 100% possession of Empire Offshore Wind Holdings LLC. Topic to sure circumstances, Equinor can even take over bp’s 50% share of the South Brooklyn Marine Terminal (SBMT) lease. bp will take over Beacon Wind Holdings LLC and the related venture firm that holds the Astoria Gateway for Renewable Power website and can grow to be the operator of the Beacon Wind initiatives. The transaction might be money impartial, besides for traditional settlements of money and dealing capital gadgets.
The settlement offers Equinor and bp with the pliability to pursue their respective priorities underneath their company methods. Equinor has greater than 20 years’ expertise with offshore wind and entered the US offshore wind market already in 2017 – and has additionally constructed a robust offshore wind portfolio with property in key markets just like the UK, Poland, Germany, and South Korea.
Following the signing of the settlement, a bid was submitted for the Empire Wind 1 venture in New York’s fourth offshore wind solicitation spherical, which closed at 3 pm ET 25 January 2024.
It has additionally been agreed with the New York State Power Analysis and Growth Authority (NYSERDA) to terminate the Offshore Wind Renewable Power Certificates (OREC) Buy and Sale Settlement for the Beacon Wind 1 venture.
Topic to closing the transaction, Equinor will take the Empire Wind initiatives ahead on a 100% possession foundation and can proceed to develop its sturdy offshore wind organisation within the US. bp will take the Beacon initiatives ahead on a 100% possession foundation.
“We aspire to be a number one firm within the power transition. Constructing on our expertise as a number one participant in US offshore wind, we now take full possession of a mature, giant scale offshore wind venture in a key power market, the place we’ve got constructed a robust native organisation,” says Pål Eitrheim, Government Vice President of Renewables in Equinor.
“Empire Wind 1 is able to ship on New York’s local weather and power objectives, with quite a few permits and provider contracts secured. The sturdy dedication by the state to develop this {industry} is mirrored within the NY4 speedy rebid providing, offering a chance to enhance worth creation for the venture,” added Molly Morris, Senior Vice President for Renewables within the Americas in Equinor.
Each Empire Wind 1 and a pair of have been impacted by industry-wide macroeconomic results, and whereas Empire Wind 1 is bidding into the NY4 solicitation, Empire Wind 2 might be matured for future solicitation rounds. Topic to the award of a brand new OREC contract within the NY4 solicitation, the venture is predicted to ship an actual base venture return in direction of the decrease finish of the guided vary for renewable initiatives of 4 – 8% on a forward-looking foundation.
Upon closing, the property might be absolutely consolidated into Equinor’s stability sheet. Taking 100% possession within the Empire Wind initiatives and SBMT lease is predicted to extend close to time period reported CAPEX for Equinor. The rise is round US$1.2 billion for 2024 and round US$1.5 billion for 2025, earlier than any venture financing. Growth of Empire Wind 1 is contingent upon a constructive end result within the NY4 solicitation, and a closing funding determination is predicted mid-2024. Equinor intends to make use of venture financing and to usher in a companion on the proper time to reinforce worth and cut back possession share and publicity. The reset for Empire Wind 2 and the exit from Beacon Wind reduces anticipated CAPEX from 2027 – 2030.
The transaction is topic to regulatory approval. The agreed efficient date is 1 January 2024 and shutting is predicted in 2Q24 or 3Q24. The transaction is predicted to end in a mixed reported loss estimated to round US$200 million for Equinor, assuming a constructive end result of the NY4 solicitation. This has no money impact and won’t impression adjusted earnings.
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