Green Energy

US Offshore Wind Auction Breaks Sales Record, 390,000 Acres Sold for $405 Mn

Offshore Wind has made its mark on the U.S. and perhaps the world’s renewable drive, with the sale of nearly 400,000 acres of the ocean just south of Martha’s Vineyard in Massachusetts, for nearly half a billion dollars at an auction that was concluded last week.

The auctions conducted by the Federal Bureau of Ocean Energy Management (BOEM) lasted over 32 rounds and two days to lease 390,000 acres of ocean land for commercial offshore wind projects for $405 million or just over $1000 per acre ($1038), the highest price ever recorded for wind lease plots in the United State. The sale broke the record set in 2016 when Norway’s Statoil corporation purchased a 79,350-acre lease off the coast of New York for $42.5 million, or about $535 an acre.

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If fully developed, the three lease areas could provide approximately 4.1 gigawatts of commercial wind power enough to power 1.5 million homes, according to BOEM in a statement which chalked up a majority of the success to the Donald Trump administration. Surprisingly, the three lease areas were first auctioned three years before they set a new sale record, however, at that time they garnered zero interest and remained unsold. In that sense, the auctions serve to drive home just how far and fast the industry has evolved in the past three years, with offshore wind energy especially becoming hugely more productive and cost competitive.

“The result of today’s sale made me very optimistic about the future of the offshore wind industry in this country,” Walter Cruickshank, BOEM’s acting director, said in a call with reporters. “This auction will further the Administration’s comprehensive effort to secure the nation’s energy future,” he added.

The three lease areas auctioned today are located 19.8 nautical miles from Martha’s Vineyard, 16.7 nautical miles from Nantucket, and 44.5 nautical miles from Block Island. [BOEM]

BOEM started the auction at $2 an acre, with 11 qualified bidders Cobra Industrial Services, Inc., East Wind, LLC, EC&R Development, LLC, EDF Renewables Development, Inc., Equinor Wind US, LLC, Innogy US Renewable Projects, LLC, Mayflower Wind Energy, LLC, Northeast Wind Energy, LLC, PNE WIND USA, Inc., Vineyard Wind, LLC, WPD offshore Alpha, LLC. And the three winning bidders after 32 rounds were, Equinor Wind which bought Lease 0520 (128,811 acres) for $135 million; Mayflower Wind Energy which bought lease 0521 (127,388 acres) for $135 million, and Vineyard Wind bought lease 0522 (132,370 acres) for just over $135 million.

[BOEM]

Before the lease is executed, the Department of Justice and Federal Trade Commission will conduct an anti-competitiveness review of the auction, and the provisional winner will be required to pay the winning bid and provide financial assurance to BOEM. The lease will have a preliminary term of one year, during which the lessee may submit a Site Assessment Plan (SAP) to BOEM for approval. The SAP will describe the facilities (e.g., meteorological towers or buoys) a lessee plans to install or deploy for the assessment of the wind resources and ocean conditions of its commercial lease area. Following approval of an SAP, the lessee will then have four and a half years to submit a Construction and Operations Plan (COP) to BOEM for approval. This plan will provide a detailed proposal for the construction and operation of a wind energy project within the lease area.

Once BOEM receives a COP, it will conduct an environmental review of the proposed project and reasonable alternatives. Public input will be an important part of BOEM’s review process. If BOEM approves the COP, the lessee will then have a term of 33 years to construct and operate the project. The record-breaking sale is an indicator of the shifting landscape of renewable energy in the country and now stands tall as a rare bipartisan success story in the US.

“To anyone who doubted that our ambitious vision for energy dominance would not include renewables, today we put that rumor to rest,” said Secretary Zinke. “With bold leadership, faster, streamlined environmental reviews, and a lot of hard work with our states and fishermen, we’ve given the wind industry the confidence to think and bid big.”

Ayush Verma

Ayush is a correspondent at iamrenew.com and writes on renewable energy and sustainability. As an engineering graduate trying to find his niche in the energy journalism segment, he also works as a staff writer for saurenergy.com.