EXPRESS #1 - December 20, 2018
Great news for the offshore wind turbine industry comes from the US. An offshore wind lease auction for three blocks off the coast of Massachusetts has brought in a record-shattering $405m. It followed an amazing 32 rounds of bidding that lasted from Thursday morning until midday on Friday 14th Dec.
The Americans have always had showbiz in their blood. But here’s the headline direct from the U.S. Department of the Interior, responsible for the bidding process: “BIDDING BONANZA! Trump Administration Smashes Record for Offshore Wind Auction with $405 Million in Winning Bids.”
The three winners are Equinor Wind (formerly Statoil ASA), Mayflower Wind Energy (a joint venture of EDPR Offshore North America LLC and Shell New Energies US LLC), and Vineyard Wind (a joint venture of Avangrid Renewables and Copenhagen Infrastructure Partners). Each won with a bid of $135m, for roughly the same area of 130,000 acres (approx. 500 sq km).
The total area of 390,000 acres, if fully developed, could support approximately 4.1 gigawatts of commercial wind generation, enough electricity to power nearly 1.5 million homes.
“To anyone who doubted that our ambitious vision for energy dominance would not include renewables, today we put that rumor to rest,” said U.S. Secretary of the Interior Ryan 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.”
From $1.5 per acre to $1,000
Until now, the highest grossing offshore wind lease sale was held in December 2016 for the lease area off New York, which received a winning bid of only $42 million.
The US Bureau of Ocean Energy Management (BOEM) now has a total of 15 active wind leases in federal waters for nearly two million acres (8m sq km). This latest auction, spanning almost 390,000 acres, has therefore generated a majority of the $473 million of revenue brought in by the offshore wind lease sales. It’s a clear sign that interest in U.S. offshore wind development is on the rise.
Although the US currently has only one operating offshore wind farm — Deepwater Wind’s 30 MW Block Island Wind Farm in Rhode Island state waters — interest in the industry has come a long way. Three years ago, a federal auction for this same area off Massachusetts failed to attract much interest. Back then, two of the four parcels on offer drew no bids at all. The remaining two parcels were won with bids of around $1.50 an acre or less.
But this latest auction saw the winning bids paying more than $1,000 per acre. Compare that to the latest offshore drilling lease auction in the Gulf of Mexico held in August, which yielded about $222 per acre for over 800,000 acres.
“These lease prices and the fact that we had 19 companies eligible to bid on these leases is great news for the overall U.S. offshore wind marketplace,” comments Liz Burdock, president and CEO of the Business Network for Offshore Wind. “Remember that just three years ago, these lease areas had no bidders at all. This strong interest from the offshore wind marketplace demonstrates the economic potential of the offshore wind industry.”
The site is a little under 40km from the Martha’s Vineyard, where Steven Spielberg filmed Jaws. So in a few years, while you are scanning the waters for great white sharks, try not to get distracted by the wind farms.
[Consultancy 4C Offshore has a fascinating interactive map of offshore wind farms across the globe here]