Wind firms pay $135m each for offshore tracts

Interior Department called the auction a 'bidding bonanza'

STATE HOUSE NEWS SERVICE

THREE LEASE WINNERS have each agreed to pay $135 million to gain access to ocean tracts off the coast of Massachusetts where they may someday build commercial-scale wind energy installations.

The results of Thursday’s federal government auction of 390,000 acres were announced Friday by the Bureau of Ocean Energy Management.

The auction, which began at 9 a.m. Thursday, appears to have spilled into late Friday morning and the winners were Equinor Wind US, Mayflower Wind Energy LLC, and Vineyard Wind.

Vineyard Wind is already in the process of building an offshore wind farm in an area south of Martha’s Vineyard on a previously leased site.

The Department of Interior, which oversees the bureau, in a press release called the results a “BIDDING BONANZA!,” adding, “Trump Administration Smashes Record for Offshore Wind Auction with $405 Million in Winning Bids.”

“To anyone who doubted that our ambitious vision for energy dominance would not include renewables, today we put that rumor to rest,” Interior Secretary Ryan Zinke said in a statement. “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.”

The American Wind Energy Association called it a “record-smashing auction,” noting the previous record for a single lease area was a $42.5 million bid from Equinor, which was then Statoil, in a 2016 lease auction in New York.

The lease prices reflect optimism within the industry about renewable energy development in the ocean, where power sector players will need to find common ground with the commercial fishing industry on access issues.

RENEW Northeast, a non-profit committed to uniting the renewable energy industry and environmental advocates, congratulated the lease winners and said in a statement that the lease areas “would be shared with boaters, the fishing industry and all those who currently enjoy use of our waters.”

“Today’s enormous investment of private capital demonstrates how offshore wind can provide energy on the scale needed to address winter energy reliability needs and reduce carbon emissions while creating thousands of high paying jobs,” said Francis Pullaro, executive director of RENEW Northeast.

Pullaro said the auction results also cast “further doubt on the wisdom of Massachusetts continuing to pursue a contract with Hydro-Quebec,” an effort that the state is forging ahead with under a 2016 renewable energy law. He said, “Despite the high cost of this imported electricity, it would only deliver power from old resources that Quebec is already selling to its other neighbors and that need no further support from Massachusetts ratepayers.”

Equinor on Friday secured a lease on an area known as OCS-A 0520, a 128,811 acre site. The OCS stands for Outer Continental Shelf.

“We are excited to have secured this attractive opportunity, Equinor’s second offshore wind lease in the United States,” Christer af Geijerstam, president of Equinor Wind US, said in a statement. “This acquisition complements our existing position on the US East Coast and gives us a foothold to engage in the Massachusetts and wider New England market, a region notable for its strong commitment to offshore wind.”

In December 2016, Equinor won the federal lease auction of an 80,000-acre site south of New York and east of New Jersey, where the company is developing projects for offshore-wind markets in both states.

Equinor, which serves more than 1 million European homes with wind power from four projects in the United Kingdom and Germany, estimates its U.S. offshore wind portfolio now has the potential to power more than 2 million homes.

Anbaric, a company dedicated to developing renewable energy infrastructure, said Friday that the auction prices “hold great promise to help keep the Commonwealth a leader in U.S. offshore wind.”

In a statement, Edward Krapels, the CEO of Anbaric, said the “greatly expanded geography for harnessing offshore energy also underscores the need for a separate, shared transmission system to minimize environmental impacts while building a new industry and delivering renewable energy at the lowest possible cost.”

According to the interior department, the following companies participated in the lease sale: 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; and wpd offshore Alpha, LLC.

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The interior department reported that 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, according to interior, during which the lessee may submit a site assessment plan to BOEM for approval. The plan will describe the facilities 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 a site assessment plan, the lessee will then have four and a half years to submit a construction and operations plan to BOEM for approval.