First US federal offshore wind power lease auction since 2018 receives high interest

The US Bureau of Ocean Energy Management Feb. 23 began a multiday offshore wind power auction for six lease areas covering more than 488,000 acres in the New York Bight region that had four bidders at $330 million for one area as of late afternoon.

US Secretary of the Interior Deb Haaland announced Jan. 12 that BOEM would hold the New York Bight offshore wind lease auction, the first under the Biden administration. The auction features the most lease areas offered in a single auction, according to BOEM.

The New York Bight is an offshore area in federal waters located between New Jersey and New York, states that have targeted developing 7.5 GW and 9 GW, respectively, of offshore wind power capacity by 2035.

At the national level, the Biden administration has set a goal of developing 30 GW of offshore wind capacity by 2030.

The New York Bight auction is the first lease auction since 2018 and BOEM estimates the area has the potential for 5.6 GW-7 GW of offshore wind power generation, according to the nonprofit Business Network for Offshore Wind.

The auction had 25 qualified registrants to bid, the Business Network said in a Feb. 22 email.

As of 3:50 pm ET, there were four bidders at $330 million for lease area OCS-A 0539, according to auction results reported on BOEM's website. The lease area is located relatively close to shore compared with the others and is closer to New Jersey than New York.

High interest level

There was also one bidder at $215.5 million for lease area OCS-A 0537 and two bidders at $209.3 million for lease area OCS-A 0538. The other lease areas had bidders at lesser amounts, with all areas receiving bids, which indicated a high level of interest within the marketplace.

"The results so far confirm the high level of interest we expected," Sam Salustro, director of coalitions and strategic partnerships at the Business Network, said in an email.

"In the four years since the last lease sale, the US offshore wind industry has made tremendous strides and this increased demand is the result," he said, adding that this also reflects the advancement of the US supply chain and port infrastructure development, as well as efforts by the federal government to create a visible long-term market, "making investment in the US and the New Jersey/New York area all the more attractive."

BOEM is expected to lease more areas in the Carolinas, California, Gulf of Mexico, Oregon, Central Atlantic, and Gulf of Maine by 2025.

Once an area is leased, the developer must receive permits from the federal government to survey, construct, and operate in a lease area, and usually must secure a financial offtake agreement. These processes can take over five years to complete, according to the Business Network.

Shortly after the auction ends, the Interior Department will announce the provisional winners for each lease area.