December 17, 2018 Read More →

U.S. offshore wind auction blows past previous record

Greentech Media:

A record-breaking auction buoyed the U.S. offshore wind industry last Friday when a “bidding bonanza” for three lease areas offshore Massachusetts yielded $405 million in winning bids. After 32 rounds of bidding spread across two days, provisional winners were announced for lease areas covering 390,000 acres in federal waters located south of both Martha’s Vineyard and Nantucket. According to the Bureau of Ocean Energy Management (BOEM), which conducted the auction, the three lease areas can support 4.1 gigawatts of wind generation capacity.

The three winning bids each came in at $135 million. Provisional winners are: Equinor Wind US, LLC, the U.S. arm of the Norwegian oil major; Mayflower Wind Energy, LLC, a 50/50 joint venture between Shell and EDP Renewables; and Vineyard Wind, LLC, a 50/50 joint venture between Copenhagen Infrastructure Partners and Avangrid Renewables.

With the conclusion of the Massachusetts auction, BOEM now manages 15 active wind leases. Lease sales have generated a total of $473 million in winning bids for the right to develop offshore wind projects across nearly 2 million acres in federal waters. Before last Friday’s auction, the highest-grossing lease sale had been a December 2016 auction for a tract offshore New York that resulted in a $42.5-mllion winning bid.

For industry watchers, the record-breaking auction demonstrates that the fast-maturing U.S. market is poised for explosive growth.

“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,” said Liz Burdock, President & CEO, Business Network for Offshore Wind, in a statement. She noted that just three years ago the same three lease areas did not receive bids in the first Massachusetts offshore wind auction.

Anthony Logan, research analyst covering North America wind power for Wood Mackenzie Power & Renewables, agreed that the aggressive bidding signaled developers’ confidence in future cost reductions. “These are just the prices to get the lease areas, and there are rent payments which jump significantly when these projects come online. At these rates they start making a meaningful impact on overall project economics,” he wrote in an email. But, he added, “another way to look at this is it’s a vote of confidence in continued LCOE [levelized cost of electricity] reductions for offshore wind, and moreover, continued LCOE reductions in the United States.”

More: Record-Breaking Massachusetts Offshore Wind Auction Reaps $405 Million in Winning Bids

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