Earlier today, the U.S. Bureau of Ocean Energy Management announced provisional winners of its offshore wind energy lease sale for five areas on the Outer Continental Shelf off central and northern California. This auction represents the first offshore wind lease sale on the west coast and the first sale to support potential commercial scale floating offshore wind technology. Auction winners included some expected names and some new market entrants.
The 31-round auction, held over a period of two days, resulted in a combined $757.1 million in high bids, equating to an average of $2,000 per acre. While this amount is significantly less than the record-setting $4.3 billion NY Bight auction held earlier this year, with an average of nearly $9,000 per acre, the combined value is well within the agency’s estimated range of $400 million to $1.6 billion. The lower value may be due to various factors, most notably that the lease areas auctioned in this process are the first in the United States to require floating offshore wind technology, and the fact that California continues to finalize its procurement approach for long lead-time renewable energy resources, including offshore wind. According to a February 2022 decision, the California Public Utilities Commission anticipates rulemaking efforts to continue into next year.
The auction involved three lease areas off the coast of Eureka in northern California and two lease areas off the coast of Morro Bay in southern California. The combined lease areas cover nearly 375,000 acres with the potential to generate more than 4.5 GW of offshore wind energy. The lease sale included a 20 percent credit for bidders who committed to contribute to floating offshore wind industry workforce training programs and U.S. supply chain development. The lease sale also included a 5 percent credit for bidders who committed to entering community benefit agreements. Auction winners, listed below, receive the exclusive right to seek BOEM approval for the development of the lease area.
|Lease Area||Provisional Winner||Lease Area Acreage||Winning Bid|
|OCS-P0561||RWE Offshore Wind Holding, LLC||63,338||$157.7 million|
|OCS-P0562||California North Floating LLC (Copenhagen Infrastructure Partners)||69,031||$173.8 million|
|OCS-P0563||Equinor Wind US LLC||80,062||$130 million|
|OCS-P0564||Central California Offshore Wind LLC (Ocean Winds and Canada Pension Plan Investment Board)||80,418||$150.3 million|
|OCS-P0565||Invenergy California Offshore LLC||80,418||$145.3 million|
In other BOEM leasing news, the agency recently proposed eight draft wind energy areas off the central Atlantic coast, spanning North Carolina, Virginia, Maryland, and Delaware. At least two of the draft wind energy areas would likely require the use of floating turbine technology given ocean depths of more than 1,500 meters. Public comment on the draft wind energy areas are due to the agency by December 16, 2022.
We’ll continue to monitor outcomes from today’s auction and emerging activities relating to the central Atlantic coast.