US announces offshore wind auction for Central Atlantic

The US Interior Department's Bureau of Ocean Energy Management will hold its next offshore wind lease sale for the Central Atlantic region on Aug. 14, with 17 companies qualifying to deliver bids during the auction.

The auction is the latest action in President Joe Biden's plan to approve 30 GW of offshore wind by 2030.

The bureau, known as BOEM, announced June 28 that the lease sale will take place for areas off the coasts of Delaware, Maryland and Virginia that could generate up to 6.3 GW if fully developed. BOEM will publish the Final Sale Notice (FSN) for the auction in the Federal Register on July 1.

The FSN includes stipulations for how companies can obtain bidding credits by supporting workforce training programs, contributing to a fisheries compensatory fund and entering into project construction labor agreements, BOEM said.

BOEM is requiring that lessees provide the Department of Defense with specific information about the personnel allowed to access wind turbine facilities as a national security measure meant to protect nearby US military operations from potential espionage activities, the FSN said.

"In addition, the lessee must resolve DOD's security concerns before it allows access to the site by foreign persons or representatives of foreign entities for which DOD has raised concerns and before the lessee uses wind turbines or other permanent on-site equipment manufactured by such an entity," the document reads.

Many of the 17 companies that BOEM cleared to participate in the auction are subsidiaries or affiliates of larger foreign-owned firms, like Shell PLC, RWE AG and Avangrid Inc.

Navigating national security concerns

The agency is also requiring lessees to abide by specific requirements identified by NASA and the US Missile Defense Agency to avoid potential impacts to operations originating from the Wallops Island Flight Facility, a satellite launch facility in the Virginia portion of the Delmarva Peninsula.

BOEM already reduced the size of its originally proposed wind energy areas offshore Maryland due to concerns raised by the Navy, Air Force and NASA regarding defense radars.

Under the July 1 FSN, offshore wind operators could be asked to contribute funds to the DOD to help manage the impacts of offshore wind turbines on each defense radar system affected by the presence of the turbines. An offshore wind lessee could also be asked to curtail wind turbine operations altogether for national security or defense purposes, according to BOEM.

Being forced to curtail wind operations would reduce the revenue-generating capacity of an offshore wind farm, making it harder to recoup costs and potentially deterring companies from participating in the auction, wind developers told BOEM previously.

BOEM said it would further coordinate with DOD and the lessee "to deconflict potential impacts throughout the project design and [construction and operations plan (COP)] review stage, which may result in adding mitigation measures or terms and conditions as part of any COP approval."

BOEM may require the lessee to enter into an agreement with DOD to implement any conditions and mitigate any identified impacts, the FSN said.

Qualified bidders

Nevertheless, BOEM has determined that 17 offshore wind companies have qualified to submit bids during the Aug. 14 auction, although it is not certain how many will actually participate.

For example, BP Central Atlantic Offshore Wind, a subsidiary of oil giant BP PLC, qualifies to participate in the auction. But it is unclear if the company will be participating after the oil company's new CEO reportedly paused all new offshore wind projects.

BP CEO Murray Auchincloss also placed a hiring freeze on offshore wind employees. Reuters and other news outlets reported June 27 that the move was in response to investor discontent with BP's energy transition strategy. BP has an offshore wind development in New York.

Other major companies slated to participate in the August auction include Shell New Energies US LLC; RWE Offshore; Avangrid Renewables LLC, Equinor ASA; TotalEnergies SE subsidiary TotalEnergies Renewables; Baltimore-based US Wind Inc.; Dominion Energy Inc. utility Virginia Electric and Power Co. and several others.