Federal offshore wind auction held for sites off Massachusetts

Federal ocean energy managers have concluded an auction to lease over 350,000 acres off the Massachusetts coast to prepare for offshore wind development.  Of the four parcels up for bid in today's auction, one was provisionally awarded to RES America Developments, Inc. and another to Offshore MW LLC.  Two other parcels failed to attract any bids.

Onshore wind turbines near the Massachusetts coast.

In today's auction conducted by the Interior Department’s Bureau of Ocean Energy Management (BOEM), RES America Developments, Inc. provisionally won the rights to Lease OCS-A 0500 (187,523 acres) after two rounds of bidding, with a winning bid of $281,285.  Offshore MW LLC provisionally won the rights to Lease OCS-A 0501 (166,886 acres) after two rounds of bidding, with a winning bid of $166,886.  These winning bids are significantly below those that were required to win previous federal competitive lease sales for offshore wind sites.

While today's lease awards are a step forward for U.S. offshore wind, neither lease awarded today grants the right to construct or operate an offshore wind project.  Rather, these leases have a preliminary term of one year, to allow the lessee time to prepare a Site Assessment Plan describing the installation of meteorological towers and buoys and other activities the lessee plans to perform to assess local wind resources and ocean conditions.  Site Assessment Plans must be submitted to BOEM for review and approval.

Once BOEM approves a Site Assessment Plan, the lessee will then have up to five years in which to prepare and submit to BOEM a Construction and Operations Plan (COP) providing detailed information for the construction and operation of a wind energy project on the lease.  After BOEM receives a Construction and Operations Plan from a lessee, BOEM will conduct an environmental review of and public comment period for the proposed project.  If BOEM approves a Construction and Operations Plan, the lessee will have an operations term of 25 years.

Lease OCS-A 0502 (248,015 acres) and Lease OCS-A 0503 (140,554 acres) did not receive bids in today's auction.  As shown on a BOEM nautical chart of the Massachusetts Wind Energy Area, these lease areas are generally farther from the Massachusetts coast than the areas awarded through today's auction.

BOEM touts its offshore wind leasing program as part of President Obama’s Climate Action Plan.  The auction held today by BOEM represents the nation’s fourth competitive lease sale for renewable energy sites in federal waters.  Including this auction, competitive lease sales have generated more than $14.5 million in high bids for more than 700,000 acres in federal waters.  Previous auctions covered sites off Rhode Island and Massachusetts, Virginia, and Maryland.  BOEM expects to hold another competitive lease sale offshore the New Jersey coast in 2015.  

Maryland offshore wind sites auctioned

The U.S. Bureau of Ocean Energy Management has sold the rights to lease sites for offshore wind projects in federal waters off Maryland to US Wind Inc. for $8.7 million.

A lighthouse on an island in the Atlantic Ocean, off Maine.

Part of the Obama administration's "Smart from the Start" offshore wind leasing program, yesterday's auction covered the rights to lease nearly 80,000 acres of the outer continental shelf.  The Maryland Wind Energy Area ranges seaward from about 10 nautical miles offshore Ocean City.  According to Department of Energy’s National Renewable Energy Laboratory, the area could support between 850 and 1450 megawatts of commercial wind generation.

The Maryland auction drew three bidders: US Wind Inc., Green Sail Energy LLC and SCS Maryland Energy LLC.  After 19 rounds, BOEM declared US Wind Inc. the provisional winner.  US Wind Inc. is a subsidiary of Italian firm Toto SpA's Renexia group. 

While winning the auction is an important first step in leasing federal ocean sites for offshore wind projects, the process will likely continue to play out for several years.  Following the auction results, US Wind Inc. will have one year within which to submit a Site Assessment Plan to BOEM for approval.  In the Site Assessment Plan, the lessee must describe what it intends to do to assess of the wind resources and ocean conditions of its commercial lease area -- for example, installing meteorological towers and buoys.  If that plan is approved, the lessee will then have up to 4½ years in which to submit a Construction and Operations Plan providing more detailed information for the construction and operation of a wind energy project on the lease.  The filing of that plan triggers further public comment and environmental review; if approved, BOEM will then issue a lease with an operations term of 25 years.  Notably, these leases generally require the lessee to pay ongoing rents; placing the winning bid in the auction conveys the right to pay that rent, but paying that bid does not count towards the lease payment obligation.

Moreover, this entire leasing process is just one of several aspects of the project that must move forward in parallel.  At the same time, US Wind Inc. is likely considering engineering issues such as turbine selection and interconnection design as well as how to finance the project.

Will federal waters offshore Maryland soon become home to an offshore wind project?