Orsted’s acquisition of Lincoln Clean Energy (LCE) gives the Danish group a “long-term platform for growth in the US” and reflects confidence in the post-PTC American onshore wind sector, said CEO Henrik Poulsen.

Poulsen said the deal for LCE – which values the Chicago-based developer at $580m and represents Orsted’s return to onshore wind after a five-year gap – followed a detailed review of potential acquisition targets that could take the global offshore wind number-one into other renewables.

“We see LCE adding to our critical mass and presence in the US … [and] as a very valuable addition to building a long-term platform for growth in the US across technologies,” Poulsen told journalists.

Responding to a question from Recharge, Poulsen said Orsted sees “an opportunity long term” in US onshore despite the stepped phase-down of the production tax credit (PTC) incentive that has driven growth there so far.

“Obviously post expiry of the PTC you will see a step down in total market volume. But we believe the volume will gradually start rebuilding again, as you see levelised cost-of-energy as very competitive against all other technologies and fuels.

“We believe that will be the long-term driver of expansion of onshore wind in the US”, although with the deal not yet closed, Poulsen cautioned it was too early for Orsted to set targets for onshore wind growth in the US or in its wider business.

Poulsen said LCE’s small solar portfolio is “very marginal” to the acquisition – “we see Lincoln essentially as an onshore wind play” – and there are no immediate plans by Orsted to expand into PV via a similar deal.

However, he confirmed that the success of the LCE team in striking corporate PPA agreements was one of the capabilities that attracted it. Poulsen said he expects such corporate offtaking to become more common with on- and offshore projects “both in the US and in Europe”.

Poulsen insisted the LCE deal will not affect its ambitions in the US offshore wind market.

Orsted earlier this year lost out to Avangrid and Copenhagen Infrastructure Partners in a landmark first 800MW auction in Massachusetts.

State authorities a week ago revealed the winning bid as a total levelised price of $65/MWh (in 2017 dollars) for the electricity and the renewable energy credits, including a 2.5% annual price escalator. In nominal dollar terms, that’s equivalent to $84.23/MWh over the course of the lifetime of the two-phase project.

Poulsen said: “It goes without saying that was a price that was lower than the one we have been bidding at. We lost based on the price, which is the simple mechanics of the auction.

“We have a now a data point on the price level, and we have to take that back and look at what that means for future auctions.”

But Poulsen reiterated Orsted’s “determination to establish ourselves in offshore wind in the US”, pointing to further opportunities in New York, New Jersey and Massachusetts itself.

“I remain quite optimistic we will find a way into US offshore wind that is quite meaningful.”

Wind

Orsted sees 'long-term opportunity' in US onshore wind: CEO