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Buyers paid rock-bottom prices for offshore wind leases off Cape Cod. Why? Some say the election.

Construction work was underway at Vineyard Wind, south of Martha's Vineyard, Sept. 26, 2024.
Liz Lerner
/
CAI
Construction work was underway at Vineyard Wind, south of Martha's Vineyard, Sept. 26, 2024.

Last week’s auction of offshore wind leases off Cape Cod drew surprisingly weak interest from the industry, observers say. Uncertainty about the election — specifically, former President Donald Trump’s pledge to stop offshore wind if he wins — could be a big factor.

None of the bidders met any competition for the wind areas they wanted, CAI has learned. All four leases sold for the minimum bid of $50 per acre. Back in 2018, the average wind lease off Massachusetts cost more than $1,000 per acre.

The federal Bureau of Ocean Energy Management auctioned leases on eight wind areas off the Outer Cape Oct. 29. Only half of them sold.

New Bedford Mayor Jon Mitchell, a longtime proponent of offshore wind, said he believes developers are waiting to see the outcome of the election.

“It's a reflection of the uncertainty in the industry right now,” he said. “The industry is holding its breath over the presidential election. We have two presidential candidates who have markedly different views about the role of offshore wind in the United States.”

Trump vowed in May to stop offshore wind with an executive order.

Vice President Kamala Harris has pledged to invest in clean energy, and she has supported offshore wind as part of the Biden administration, which has approved 10 offshore wind projects.

But Harris has not released a detailed plan for offshore wind.

In last week’s auction, Avangrid and Invenergy bid on two wind areas each, but not the same ones.

So, unlike in 2018, when bidding for part of the wind area south of Martha’s Vineyard and Nantucket lasted for 32 rounds, last week’s auction ended after just a single round of bidding.

Neither company had to raise its minimum bid.

Ken Kimmell, chief development officer at Avangrid, said he expected to see more interest.

“I was also surprised that there were only two bidders,” he said.

But Avangrid considered the long-term demand for offshore wind in New England.

“We looked at the fact that the New England area needs, according to ISO New England, 34GW of offshore wind by 2050,” he said.

In round numbers, each of the wind leases sold covers between 98,000 and 125,000 acres. Prices ranged from $4.9 million to $6.2 million.

Kimmell said the cost of carrying the lease year to year, prior to construction, is relatively small.

“So from our point of view, this was a good opportunity,” he said. “Obviously, it requires a mindset about the long term. These projects aren't going to get built right away.”

He said the offshore wind projects Avangrid currently has in development will be built in the 2030s, and projects off Cape Cod, in the Gulf of Maine, will be planned for the 2040s.

The four wind-area leases that went unsold remain available for a new presidential administration to auction in the future.

In the meantime, last week’s auction illustrates the state of today’s offshore wind industry — at least until Election Day, the New Bedford mayor said.

“My interpretation of this is that folks in the industry are treading lightly because of the possibility of a Trump presidency,” he said.

Jennette Barnes is a reporter and producer. Named a Master Reporter by the New England Society of News Editors, she brings more than 20 years of news experience to CAI.