February 22, 2019

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Orsted, a Giant in Offshore Wind Farms, Makes a Move in U.S.

Orsted, a Giant in Offshore Wind Farms, Makes a Move in U.S.
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Orsted, a Danish company that is one of the world’s largest offshore wind energy developers, said on Monday that it would acquire its Rhode Island-based rival Deepwater Wind for $510 million, a sign that the United States is becoming an attractive market for offshore energy generators.

Orsted has a global portfolio of projects in places including Britain, Germany and Taiwan, as well as in Denmark. But this year, it failed to win a competitive bidding process held by Massachusetts to develop what is likely to be the largest offshore wind installation in the United States.

The Deepwater purchase appears to be an attempt by Orsted to acquire a company that can better navigate the regulatory and political systems of the United States.

Deepwater, owned by the D. E. Shaw, a hedge fund, seems to have a knack for lining up deals. It built the first offshore wind farm off the United States, a five turbine installation off Block Island, in its home state, that came online in 2016. The company, based in Providence, also has several projects underway, including plans to generate large amounts of electricity for Rhode Island and Connecticut from a tract off Martha’s Vineyard near the swath that will feed power to Massachusetts.

In a statement, Martin Neubert, head of offshore wind at Orsted, cited “Deepwater Wind’s longstanding expertise in originating, developing and permitting offshore wind projects in the U.S.”

Northern European countries like Denmark, Britain and Germany have dominated offshore wind, which until recently required large subsidies to be economically viable. Costs have come down rapidly in recent years, however, and developers, including Orsted, have agreed to build some projects without the benefit of subsidies.

By acquiring what is a relatively small company for a substantial price, Orsted appears to be confirming that the United States is becoming more receptive to offshore wind farms.

Falling costs for offshore projects have caught the attention of electric power providers and investors in the United States. By planting large arrays of turbines on the sea bottom, developers say they can construct large installations that are mostly out of sight of land yet within easy transmission range of large population centers like Boston and New York.

These projects can generate large amounts of electricity free of carbon dioxide emissions, and can be used to meet clean energy targets and to replace aging nuclear and coal-fired power stations. Among other states, New Jersey and New York have ambitions to build substantial offshore wind projects.

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