Huge lease rounds give US floating wind big pre-election push with unprecedented 16GW on offer
Low prices expected in upcoming lease auctions amid vast Gulf of Maine supply and sluggish demand in high-risk Oregon
The US move to release more 16GW of deepwater acreage off both the North Atlantic and Pacific coasts “is a bit surprising but forward thinking,” said John Murray, senior research analyst, S&P Global Commodity Insights.
“There are many challenges that floating wind still has to resolve before it can move into the commercial phase of its evolution,” he noted, adding that S&P doesn't expect to see US floating wind projects built before 2030.
Federal coastal energy regulator Bureau of Ocean Energy Management (BOEM) will offer 195,012 acres (789 sq. km) in two leases off Oregon in the Pacific Northwest holding around 3.2GW of capacity 15 October.
This will be shortly followed by a much larger auction in the Gulf of Maine on 29 October covering some 827,889 acres (3,350 sq. km) in eight leases holding over 13GW of floating wind potential, the most ever offered in a US offshore wind lease auction.
The auctions are the sixth and seventh under President Joe Biden’s administration, part of its industry ramp including project permitting towards its 30GW by 2030 goal.
The inclusion of floating wind lease sales “is likely due to uncertainty around future support for clean energy technology post the November presidential elections,” said Murray and part of efforts to build “a large and robust offshore wind project pipeline for the next four years.”
BOEM’s lease sales push
Yet stubborn technical and cost challenges remain for the nascent sector that may impact demand and lead to lower pricing than has been seen in past rounds.
The laboratory, part of the Department of Energy, highlighted inflation and interest rates as well as slow start for the sector resulting in lower-than-expected deployment resulting in higher costs
These challenges will be particularly acute for Oregon, where water depths in the wind energy areas (WEAs) exceed 1,000 metres, far beyond the range of current technologies.
Offtake is likewise a major concern, and with little more than 4 million residents across a sprawling area, Oregon lacks industrial infrastructure or load centres to support a large-scale floating wind sector.
The auction has so far attracted five qualified bidders but based on previous leasing rounds most won’t participate.
South Coast Energy Ventures, has no known track record of sector development but may have possible ties to solar power.
Gulf of Maine
Prospects look brighter in the Gulf of Maine, where an unprecedented amount of acreage on offer will likely find a ready market amid burgeoning demand from the densely populated New England states.
Led by Massachusetts, the six states of the region are at the vanguard of US climate and clean energy initiatives and have spearheaded offshore wind development.
“With multiple states at play and with such a great opportunity to ensure leases are available before any leadership changes in the White House, it would make sense to put as much real estate on the table as possible,” said Kris Ohleth, head of offshore wind consultancy Special Initiative for Offshore Wind (SIOW).
Massachusetts mandates 5.6GW by 2027 but its net zero ambitious could have it seeking more than 20GW over the next decades. Maine meanwhile is looking at sector goals of 3GW.
“The path to market for these lease areas is readily evident,” said John Dalton, president of energy consultancy Power Advisory.
Water depths averaging around 200 metres in the lease areas are likewise more reasonable.
Fourteen bidders have qualified for the round, minus Mainstream which remains on the roster here as well.
Many of the bidders appear to redundant, with Mitsubishi’s Diamond Offshore Wind appearing separately and as part of Pine Tree, which also appears.
Others are industry or US sector newbies that may refrain from actually participating as has been seen in other rounds.
Still, the number of leases on offer “along with BOEM’s offshore wind leasing schedule, which identifies a second Gulf of Maine lease area auction in 2028, should constrain prices,” said Dalton.
Development will face fierce opposition from other coastal users on both coasts, particularly from fisheries and Tribes.
The Confederated Tribes of Coos, Lower Umpqua and Siuslaw Indians (CTCLUSI) filed its suit against BOEM in US District Court for the District of Oregon aiming to stop the auction.