Denmark's Largest Energy Company to Acquire Deepwater Wind
An indication that growth in the offshore wind industry may soon accelerate came on Monday with the announcement that Orsted, Denmark’s largest energy company and the world’s largest offshore wind developer, will acquire Deepwater Wind, the Rhode Island company that plans to construct and operate the South Fork Wind Farm some 35 miles from Montauk. The $510 million acquisition, from the D.E. Shaw Group, was announced on Monday.
The companies’ offshore wind assets and organizations will be merged to form the largest offshore wind system with the most comprehensive geographic coverage and largest pipeline of development capacity in the United States, delivering renewable energy to seven states, according to a statement issued on Monday. The transaction is expected to close by end of 2018.
The new organization is to be called Orsted US Offshore Wind. Jeffrey Grybowski, Deepwater Wind’s chief executive officer, will be co-C.E.O. of the new company, and Deepwater Wind’s David Hang will be president and chief financial officer. From the Orsted group, Thomas Brostrom will be the new company’s chief executive officer and Claus Bojle Moller its chief operating officer.
Mr. Grybowski said on Monday that he is excited to be partnering with the company that built the world’s first offshore wind farm in 1991 and has constructed some 1,200 turbines since then.
“This really is a company that is the global leader. We’re in a place here in the U.S. now with a market that has really taken off, with projects that have been built or proposed up and down the East Coast. We saw an opportunity to combine what Deepwater Wind does best with what they do best — a new company that will set standards for offshore wind in the U.S.”
“Deepwater Wind has done a fantastic job as a first-mover in U.S. offshore wind,” Mr. Brostrom said in a statement issued on Monday, “and I look forward to joining and integrating the two U.S. organizations. We have exciting times ahead of us delivering large-scale clean energy projects to households and businesses along the Eastern Seaboard. Orsted will maintain a strong presence in Massachusetts and Rhode Island and will, of course honor the local commitments associated with Deepwater Wind’s projects along the East Coast.”
Development of the South Fork Wind Farm will continue as planned, with no change to its Amagansett office and staff, Mr. Grybowski said. “The team on the ground in Amagansett where our office is will remain. The folks that have been working on the South Fork for a number of years now will continue,” he said. “All the Deepwater Wind team is staying in place, just merging together with a new set of colleagues. We’ve got a lot of work to do. We will be adding to the collective team over time.” The plan to establish a base of operations on Long Island is unchanged, he said.
Deepwater Wind submitted an application to the State Public Service Commission last month for the portion of the South Fork Wind Farm’s transmission cable that would lie in state waters and underground on a path from its landing to the Long Island Power Authority substation in East Hampton. It submitted a construction and operations plan for the installation to the federal Bureau of Ocean Energy Management in June.
Multiple other federal and state agencies must sign off on the project, a review process that may take up to two years. Should the project proceed according to Deepwater Wind’s hoped-for schedule, the wind farm could be operational late in 2022.
Deepwater Wind’s portfolio has a total potential capacity of approximately 3.3 gigawatts, comprising the five-turbine, 30-megawatt Block Island Wind Farm, the first offshore wind farm in the United States; three offshore projects in Rhode Island, Connecticut, Maryland, and New York, including the proposed South Fork Wind Farm, with a total capacity of 810 megawatts, and approximately 2.5 gigawatts of development potential across three federal lease areas off Massachusetts and Delaware.
Orsted’s current offshore wind portfolio in the United States has a total capacity of approximately 5.5 gigawatts. That includes development rights for up to 2 gigawatts at the Bay State Wind site off the coast of Massachusetts, owned in a joint venture with Eversource; development rights for up to 3.5 gigawatts at the Ocean Wind site off the New Jersey coast, and two 6-megawatt wind turbine positions for phase one of Dominion Energy’s Coastal Virginia Offshore Wind Project. The company has exclusive rights with Dominion Energy for the potential development of up to 2 gigawatts of offshore wind capacity.
Gov. Andrew M. Cuomo has set a goal for the state to obtain 50 percent of its electricity from renewable sources by 2030. Last month, the New York State Energy Research and Development Authority and the Danish Ministry of Energy, Utilities, and Climate announced the signing of a memorandum of understanding that supports the continued cooperation regarding strategies and solutions for the development of offshore wind energy. That move is unrelated to the merger of the offshore wind assets of Deepwater Wind and Orsted, Mr. Grybowski said.
This article was updated with the version that appeared in print on Oct. 11, 2018.