Orsted Divests 50% Stake in Three US Onshore Projects

Denmark’s national energy company Orsted has announced that it will be divesting a 50% equity stake in three US onshore projects to Energy Capital Partners (ECP), a leading energy transition-focused investor and the largest private owner of power generation and renewables in the US.

The farm-downs include two solar farms in Texas – Mockingbird Solar (468 MW) and Sparta Solar (250 MW) – and Eleven Mile Solar Center, a 300 MW solar and 300 MW/1,200 MWh battery storage project in Arizona. With operations commencing in 2024, all three projects have tax equity partnerships and power purchase agreements in place.

The value of this transaction is $572 million, representing continued execution on Orsted’s divestment programme and generating proceeds to support its progress towards the company’s mid- and long-term targets.

With Mockingbird, Eleven Mile, and Sparta Solar officially online, Orsted now has a portfolio of over 6 GW of onshore wind, solar, and battery storage projects in operation or under construction across the US.   

Orsted will retain the remaining 50% equity ownership interest in the three projects and will continue to operate the projects over their lifespan.

As the financial closing of the transaction is across different project companies, the total impact from the transaction will be recognised across the reporting periods Q4 of 2024 and Q1 of 2025 subject to certain conditions precedent.

This year, Orsted raised approximately $734 million in upfront proceeds for these projects from tax equity partner J P Morgan and subsequently signed its first long-term tax credit transfer agreement for Mockingbird Solar Center. The sales price relating to the divestment and tax equity funding brings the total proceeds raised for the three projects to over $1.3 billion.

James Giamarino, Head of Commercial in Region Americas at Orsted, said that these transactions reflected their close engagement with a range of commercial partners, including tax equity and transferability partners, which were all key to the growth of Orsted’s US onshore portfolio.

The farm-down of the three projects builds on Orsted’s existing partnership with ECP, which purchased a 50 % equity stake in three wind farms and one solar farm in 2022 as part of Orsted’s first-ever farm-down in the US onshore market.

Orsted Welcomes ECP

Cody Castaneda, Head of Partnerships & M&A Americas at Orsted, said that they were excited to bring on ECP as a partner in these additional assets.

“Our continued partnership reflects the valuable benefits that our diverse portfolio provides for investors, and we are grateful to ECP for sharing our commitment to supporting the expansion of renewables and American energy generation,” Castaneda said.

Matt Himler, Principal at ECP, said that these projects are prime examples of the kind of large-scale clean energy infrastructure the US needs to meet the growing demand for electricity.

“We are pleased to expand our partnership with Orsted and to invest in their diversified portfolio of contracted solar and battery storage assets in high load growth markets. We look forward to leveraging our extensive sector expertise and track record in renewables to deliver carbon-free energy to Arizona and Texas,” Himler added.