Offshore staff
WASHINGTON, DC & NEW ORLEANS – The Biden administration’s first-ever auction of offshore wind development rights in the Gulf of Mexico ended with a single $5.6-million winning bid on Tuesday, reflecting meager demand for the clean energy source in a region known for its oil and gas production.
Germany’s RWE won rights to 102,480 acres (41,472 hectares) off Louisiana for $5.6 million, while the other two lease areas on offer off Texas received no bids, according to results posted on the Bureau of Ocean Energy Management website.
RWE’s awarded site is 44 miles off the coast of Louisiana and has water depths of 10-25 meters. The company said that the lease area has the potential to host up to 2 GW of new capacity, enough to power over 350,000 US homes with clean energy. The project is expected to be in operation by the mid-2030s, contingent upon permitting timelines.
RWE said the Louisiana lease was attractive because the state has strong existing coastal port and supply chain infrastructure and a goal to install 5 gigawatts of offshore wind capacity by 2035. Texas does not have an offshore wind target.
But the overall result only represents a fraction of the billions of dollars of bids secured in an offshore wind lease sale off New York and New Jersey in February 2022, according to a Reuters analysis. Those states have passed laws that require utilities to buy power from offshore wind projects – mandates considered critical for a technology that is estimated to produce electricity at twice the cost of a natural gas plant.
The Gulf’s lower wind speeds, soft soils and hurricanes are potential challenges to the industry. The Southeast also has low power prices that could make it harder for higher-cost offshore wind generation to compete for electricity contracts.
Despite the slim results, the sale was applauded by Bureau of Ocean Energy Management (BOEM) Director Elizabeth Klein. “Today’s lease sale represents an important milestone for the Gulf of Mexico region — and for our nation — to transition to a clean energy future,” Klein said. She said the Louisiana lease had the potential to power about 435,400 homes and create hundreds of jobs.
Fifteen companies were qualified to bid at the sale, according to a BOEM document. As reported by Reuters, they included offshore wind development arms of European energy companies Equinor, Shell, RWE and TotalEnergies, all of which are already developing US offshore wind leases in other regions.
08.29.2023
