New Offshore Wind Leases Auctioned for Record Amount

Dec 14, 2018

Credit Vineyard Wind / www.vineyardwind.com/the-project/

The Bureau of Ocean Energy Management (BOEM) wrapped up a two-day bidding process for three  parcels of ocean to be developed for offshore wind farms, the highest grossing offshore wind auction to date.

Officials were stunned, as the auction brought in a total of $405,100,000. 

"Wow, this is the highest grossing sale ever, and we are truly blown away by this result," said acting director Walter Cruickshank. 

Vineyard Wind, which has already secured an offshore wind contract with the state, was one of the winners, gaining its second plot in the lease area with a winning bid of $135,100,000. The other two companies that won were Norwegian energy company Equinor, formerly known as Statoil, and Mayflower Wind Energy, owned by Shell.

The area totals about 390,000 acres of ocean off the Massachusetts coast, and experts believe that the increased interest in bidding on these lease areas signals that the offshore wind industry is being taken more seriously in the United States. 

"With the introduction of the energy bill and the legislation that Massachusetts has brought forward, it has really emphasized that offshore wind is a very viable market here in the northeast," said offshore wind expert Carolyn Heeps of the construction engineering company Lloyd's Register.   

While much of the power in the offshore wind industry is based in Europe, Heeps predicts that as more companies become interested in offshore wind in the United States, a domestic market can be created.

For comparison, the lease auctions that preceded this auction, for parcels of ocean off the coast of New York (in 2015) and North Carolina (2017), went for $42,000,000 and $9,000,000, respectively. When Vineyard Wind secured a lease area back in 2015, they won their parcel for just under $300,000.

Securing a lease does not automatically guarantee a company can begin constructing a wind farm. Construction is dependent on individual state permitting processes and further permitting by BOEM. The companies have about four years after securing a lease area to begin construction.