Massachusetts Offshore Wind Auctions Break U.S. Record for Highest Lease Prices

In a confirmation of the growing strength of the U.S. offshore wind market, three offshore wind energy leases offered at auction by the U.S. Department of Interior Bureau of Offshore Energy Management (BOEM) in Massachusetts were won at prices of $135 million, $135 million and $140 million, a huge new record for U.S. offshore wind leases.

“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. “Remember that just three years ago, these lease areas had no bidders at all. This strong interest from the offshore wind marketplace demonstrates the economic potential of the offshore wind industry.”

The auction consisted of 32 rounds before determining the provisional winners of Lease Area OCS-A 0520 (128,811 acres), OCS-A 0521 (127,388 acres), and OCS-A0522 (132, 370 acres). Winning bids totaled $410 million in high bids.

“BOEM should partner with the states where offshore wind development is underway and put some of the auction proceeds towards developing grants and programs that invest in port infrastructure upgrades and support U.S. companies seeking capital investments to become part of the supply chain,” Burdock added. “Cost efficiency, environmental responsibility and the creation of local jobs showcase offshore wind’s advantages as an alternative energy. Payments by developers to lease ocean waters should benefit all parties involved, including state ratepayers, high-skilled workers and supply chain businesses in the industry.”

Burdock noted that the success of the Massachusetts auctions should encourage BOEM to expedite the next series of auctions on both coasts, and to expand offshore wind activities to the Gulf and U.S. territories in the Caribbean.

The previous three BOEM offshore wind energy auctions took place in New Jersey (2015--$1.9M), New York (2016--$42.5M) and North Carolina (2017--$9M) and have reflected a growing market for offshore wind energy as more European developers and manufacturers invest in the U.S. East Coast potential for generating clean, renewable and sustainable electricity.

The three Massachusetts areas were previously known as Lease OCS-A 0502 (248,015 acres) and Lease OCS-A 0503 (140,554 acres) and did not receive bids in the first Massachusetts auction in 2015.

According to an analysis prepared by BOEM, if fully developed, the 390,000-acre area leased could support approximately 4.1 gigawatts of commercial wind generation, enough electricity to power over 1.5 million homes.

Regarding next steps for the winners, each lease will have a preliminary term of one year, during which the lessee will submit a Site Assessment Plan (SAP) to BOEM for approval. A Site Assessment Plan describes the activities (installation of meteorological towers and buoys) a lessee plans to perform for the assessment of the wind resources and ocean conditions of its commercial lease area.

If a Site Assessment Plan is approved, the lessee will then have up to five years in which to submit a Construction and Operations Plan (COP) to BOEM for approval. This plan provides detailed information for the construction and operation of a wind energy project on the lease.

BOEM’s next set of auctions is expected to include four Wind Energy Areas in the New York Bight area under the state of New York, which is scheduled for early 2020.