On Tuesday, the Bureau of Ocean Energy Management announced that the first auction of leases of offshore wind areas will be held on July 31. Even though it now looks as though Cape Wind will eventually get to the finish line, this competitive lease auction, for areas off the coast of Rhode Island and Massachusetts, can really be seen to mark the true beginning of an offshore wind market.
The formal notice contains substantial information – much more than can be fully described here – for both prospective bidders and others interested in the development of offshore wind. Key points include:
- Minimum bids of $1/acre for the 67,250 acre South Lease Area and $2/acre for the 97,500 acre North Lease Area.
- A full description of the manner in which the auction will be conducted:
- With some bells and whistles, the auction will be conducted in separate rounds, with BOEM simply asking each bidder whether it is willing to pay the price set for each Lease Area for that round. The auction basically ends when there is only one “yes” for each Lease Area.
- The auction will include a non-monetary component. Bidders who can demonstrate that they have a joint development agreement in place with a state for development of the project will get a 20% credit on the most expensive Lease Area on which they are bidding. Bidders with a power purchase agreement in place will get a 25% credit for the most expensive Leased Area on which they are bidding. For example, if BOEM sets the minimum bid for the North Lease Area at $2 million for some round, a bidder with a PPA in place would only have to bid $1.5 million to qualify for that round
- Links to the leases for both the North Lease Area and South Lease Area.
- A list of the qualified bidders, who are:
- Deepwater Wind New England, LLC
- EDF Renewable Development, Inc.
- Energy Management, Inc.
- Fishermen’s Energy, LLC
- IBERDROLA RENEWABLES, Inc.
- Neptune Wind, LLC
- Sea Breeze Energy, LLC
- U.S. Mainstream Renewable Power (Offshore) Inc.
- US Wind Inc.
As we have noted previously, these leases will not authorize construction of wind projects. They will only authorize implementation of the Site Assessment Plan and then the Construction and Operations Plan. Only after additional environmental reviews would the construction of the projects be authorized. Nonetheless, this seems as though it’s the real thing. In the fullness of time, we’re going to see turbines in these waters.
Notwithstanding the potential “greener power” aspects, I think your conclusion is premature that this is “the real thing” . In addition to “regulatory authorization”, it will ultimately need to be established that someone can actually build, generate, transmit and operate/maintain these turbines and the associated infrastructure competitively 20-50 miles offshore in the harsh marine environment in an era of decreasing (vanishing?) appetite for significant subsidies. Cheaper onshore competition (albeit not all of it renewable) is not likely to disappear.Indeed, turbines may be built this far (too far?) offshore, but will they be operating ten years later?
All true. I’ll still be very surprised if it doesn’t happen. Too many reasons why it has to. Of course, as they say, that’s what makes a horse race. Time will tell.
…and, I will admit, there are precedents to watch. See, for example, the Belwind project about this far off the Belgian coast. Two phases built, a third in the works. Don’t know how the actual economics compare.