Offshore leases attract little interest

AN AUCTION FOR potential wind farm parcels off the coast of Massachusetts drew little interest on Thursday, as two firms submitted low bids for two areas and no bids were placed on the other two up for lease.

The US Department of Interior’s Bureau of Ocean Energy Management awarded one lease to RES Americas Development, the North American subsidiary of RES Ltd.  The firm submitted a winning bid of $281,285 for an area totaling nearly 187,500 acres, or about $1.50 an acre. The British renewable energy company has constructed about 100 wind projects totaling 8,000 megawatts internationally.

Offshore MW offered the other winning bid, paying $166,886 for the second 167,000 acre-site, or about $1 per acre. The Princeton, New Jersey, firm is a subsidiary of Wind MW, a German company building a 288-megawatt wind project in the North Sea.

The other two parcels up for lease, both of which were further offshore, attracted no interest. The bureau intends to consult with state officials to determine next moves for the two remaining parcels. The parcels are located in the state’s wind energy area, 12 nautical miles off the southeastern coast.

Federal officials set minimum bids for the Massachusetts parcels significantly lower than for sites elsewhere in the country. According to Abigail Hopper, the director of the Bureau of Ocean Energy Management, wind energy development sites off  the coast of states that offer power purchase agreements, offshore renewable energy credits, or some other financing program are more attractive to companies.  “That obviously has value and can impact the price that companies are willing to pay for the leases,” she said during a telephone press conference.

Hopper also noted that Massachusetts sites are in deeper waters than parcels in other regions, making potential wind projects more expensive to build.

Legislation is pending in Massachusetts that would require utilities to seek competitive bids for power from offshore wind farms, which could make sites off of the state’s coast more attractive.

The one-year federal leases allow the firms to survey and study ocean conditions to gauge the potential for wind energy generation. A preliminary plan must be submitted for final approval before surveying can begin. Once federal officials sign off on a preliminary plan, the companies have up to five years to submit more detailed construction and operation documents.

Cape Wind, the only other offshore wind project off the coast of Massachusetts, is in trouble. The proposed wind farm in Nantucket Sound lost its power purchase contracts with two local utilities when it failed to meet construction and financing deadlines, and it’s unclear whether the project will survive.

Hopper said that Cape Wind’s recent issues “shouldn’t be read as any sort of indicator of what happened in the auction.  I am very encouraged by the fact that two experienced wind developers have chosen to bid and have won provisional leases in Massachusetts.”

The new leases are “good news” for wind energy development, according to Sean Mahoney, a Conservation Law Foundation executive vice president. “You’ve still got the private sector saying that they believe in offshore wind and they can make some money off of it,” he said.

Asked what would prevent the two new sites from attracting the same opposition that Cape Wind did, Mahoney noted that the parcels are much further offshore. “You wouldn’t necessarily see them from the compound in Hyannisport,” he said.

The awards also signal fresh business prospects for the New Bedford Marine Commerce Terminal, which was expected to be the primary staging area for Cape Wind.