December 18, 2018
Historic, Record-breaking Offshore Wind Lease Auction
By Val Stori
Equinor Wind, Mayflower Wind, and Vineyard Wind are the three provisional winners of last Friday’s Bureau of Ocean Energy Management (BOEM) competitive wind energy area lease auction. BOEM opened the competitive bidding process on Thursday morning for three lease areas off the coast of Massachusetts. The three lease areas sold for a combined price of $405 million dollars after thirty-two bidding rounds. Each lease area was auctioned at approximately $135 million. This historic auction and the record-breaking prices reflect the region’s strong commitment to offshore wind.
The three areas consisted of nearly 390,000 acres, which had been offered for auction previously in 2015 as two lease areas, but that had gone unsold. Two different adjacent lease areas were sold for a combined $450,000 in 2015.
BOEM opened its eighth competitive lease auction with a minimum-asking bid of $250,000. Over the next two days, eleven parties participated in the until only one bidder was left for each lease area. The bid amounts surpassed all expectations — BOEM acting director Walter Cruickshank perfectly captured everyone’s stunned reaction on a post-auction press call, “Wow, we are truly blown away by this result.” Prior to last Friday’s auction, the highest lease award was $42.5 million for an area offshore New York in 2016.
The auction clearly demonstrates high industry confidence in the U.S. offshore wind market. State policy and procurement requirements in the Northeast provided a powerful signal and incentive that likely led to the highly competitive auction and significant lease area investments. We can expect another competitive auction for the New York/New Jersey bight wind energy area in late 2019.
This blog post was also published in Renewable Energy World.