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U.S. to Hold First Offshore Wind Farm Lease Auction

Off-shore wind energy generation isn't new in places like Europe, but it presents a new frontier in the United States. The U.S. Department of Interior announced Tuesday that it will hold the first-ever competitive lease sale for renewable energy development on the outer continental shelf.

The Bureau of Ocean Energy Management will hold the auction on July 31 and offer up 164,750 acres about 9.2 nautical miles off Rhode Island and Massachusetts for wind energy projects. The auction will result in two leases.

Harnessing the strong offshore wind seems a promising way to boost the country's supply of clean power. But it also has attracted criticism for its environmental impact.

Although the federal government is billing the auction as the first-ever lease sale for offshore wind farms, whoever wins the leases won't be the first to develop offshore wind in the country.

The 420-MW Cape Wind project off Nantucket Sound in Massachusetts was first proposed more than a decade ago, and it has accumulated a rather torturous history of securing regulatory approvals and fighting opposition to the project, especially from residents in the area that believe the project will destroy beautiful views and hurt the fishing industry. Cape Wind is currently waiting to see if it could get a federal loan guarantee to help finance the $2.6 billion project.

The Interior Department set out to speed up offshore renewable energy development in 2009. It first settled a dispute with the Federal Energy Regulatory Commission over who had the authority to issue leases and licenses for wind and ocean energy projects in the outer continental shelf. The two agencies essentially agreed to divvy up the responsibilities: Interior's Minerals Management Service would oversee the production and transmission of non-ocean energy projects while the commission would regulate those that use waves and currents to generate electricity. Ocean energy developers still need to get leases from the Interior, though.

In 2010, the then Interior Secretary Ken Salazar broke the Minerals Management Service into three offices. One of them, the Bureau of Ocean Energy Management, will hold the wind lease auction next month.

In 2009, Interior also issued five exploratory leases for studying the feasibility of building offshore wind farms off New Jersey and Delaware.

For the commercial wind farm development, the 165,000 acres to be leased off Rhode Island and Massachusetts could support 3,395 megawatts of power generation, according to a report by the National Renewable Energy Laboratory.

The Bureau of Ocean Energy Management already has created a list of nine companies that it deems "technically and financially qualified" for submitting bids next month. The companies include Deepwater Wind New England, EDF Renewable Energy Development, Iberdrola Renewables and U.S. Mainstream Renewable Power.

Offshore wind energy development has been booming in Europe for some time. Europe added nine power plants totaling 1,166 MW in 2012, according to the European Wind Energy Association. Cumulatively, there were 4,995 MW of wind farms in 10 European countries by the end of last year. 

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