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Third US Offshore Wind Lease Auction Goes to Italy-based US Wind

The U.S. Bureau of Ocean Energy Management (BOEM) held its third auction of offshore wind leases yesterday, this time for prime U.S. federal waters off the coast of Maryland. Italian renewable energy company US Wind Inc. won the 80,000-acre parcel with an $8.7 million bid, well above previous auctions.

The area of interest was separated into two parcels, a North and South lease area located about 10 miles off the coast of Ocean City, Maryland. If fully developed, this land has the potential to support up to 1,450 MW of offshore wind capacity.

Sixteen companies expressed interest in the area and were qualified to compete, including familiar names from the previous two offshore auctions: Fishermen’s, Iberdrola, Sea Breeze, Orisol, Apex, Energy Management, SCS Maryland Energy, EDF, Dominion, Convalt, Bluewater Wind Maryland, Green Sail, Maryland Offshore Wind, RES America Developments, Seawind, and US Wind. Out of the sixteen, only three companies — US Wind, Green Sail and SCS Maryland — participated in a 19-round bidding process.  

Last year, BOEM held two offshore wind auctions. Deepwater Wind won the first auction for two parcels off the coasts of Massachusetts and Rhode Island with a $3.8 million bid. The 164,000-acre area holds an estimated 3.6 GW of potential. Dominion Virginia Power won the second auction for land 23 miles off the Virginia coast with a $1.6 million bid, which amounts to 2 GW of potential on 112,000 acres. BOEM also has a hand in facilitating the 454-MW Cape Wind project, which will likely be the first U.S. offshore wind farm, and the 30-MW Block Island Wind Farm, which is following close behind. Hoping to capitalize on these developments, the city of New Bedford, Massachusetts is constructing an offshore wind port to facilitate the construction and transportation of materials for the U.S. Atlantic coast.

In addition to federal support, Maryland Governor Martin O’Malley has promised a $1.7 billion, 20-year taxpayer subsidy for a 210-MW offshore wind farm at the site, the first subsidy created for a lease site. Once the project is commissioned, household electric rates will increase up to $1.50 per month and businesses will see a 1.5 percent monthly surcharge. The bill was signed into law after several years of debate, and coincides with Maryland’s renewable portfolio standard (RPS), which calls for 20 percent of its electricity to come from renewables by 2022. O’Malley hopes the law will not only help reduce emissions, but also boost the economy. 

“We need a jobs agenda to match our climate challenge,” said O’Malley in a statement.  “Expanding renewable energy, like we’re doing here, will bring Maryland’s vision for clean energy one step closer to reality and clearly set our State apart on the country’s renewable energy landscape.”

US Wind has one year to send BOEM a site assessment plan, which describes how the company will evaluate wind resources at the site. It then has 4.5 years to submit a construction and operations (COP) plan, followed by an environmental assessment. Once approved, US Wind will have earned a 25-year term of operations.

“[Yesterday’s] results are a major achievement and reflect industry confidence as we strengthen our nation’s foothold in this new energy frontier,” said U.S. Secretary of the Interior Sally Jewell in a statement. “The collaboration and thoughtful planning that went into this lease sale will serve as a model as we continue up and down the coast in our efforts to ensure wind energy is developed in the right way and in the right places.”

BOEM is scheduled to hold additional offshore wind lease auctions off the coasts of Massachusetts and New Jersey within the next year. 

Lead image: Offshore wind via Shutterstock

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