Feds sell N.J. leases for $1.9M

Source: Phil Taylor, E&E reporter • Posted: Tuesday, November 10, 2015

The Interior Department today announced plans to award two wind energy leases off the New Jersey coast for $1.9 million, a key step in developing a federal wind energy area with an estimated 3,400 megawatts of commercial potential.

The Bureau of Ocean Energy Management’s online auction lasted seven rounds and drew competitive bidding from three companies.

RES America Developments Inc. submitted a winning bid of $881,000 for the rights to develop 160,000 acres in the southern half of a wind energy area about 8 miles from Atlantic City. US Wind Inc. submitted a winning bid of $1 million to develop 183,000 acres in the northern half.

Fishermen’s Energy, whose efforts to build a 25-MW pilot offshore wind farm nearer the Garden State shores have been stymied by the state’s Board of Public Utilities, was the third bidder.

“Through extensive outreach and public engagement, we reduced potential use conflicts while moving the country closer to harnessing the enormous potential of wind energy along the Atlantic coast,” Interior Secretary Sally Jewell said in a statement.

Today’s auction showed “emerging market demand for renewable energy” and marked “another major step” in building wind farms off the East Coast, she said.

BOEM Deputy Director Walter Cruickshank today said the seven rounds of bidding signaled high demand for the leases. “We’re pleased with the outcome,” he said.

The demand appears to be more robust — on a bid-per-acre basis — than BOEM’s previous offshore wind auction off Massachusetts in January, in which two companies bid a combined $448,000 for two tracts totaling 354,000 acres about 14 miles south of Martha’s Vineyard.

But it fell short of the bidding frenzy for waters off Maryland in August 2014, when a company bid more than $8.7 million for two leases covering a combined 80,000 acres.

Once today’s leases are officially signed, the companies will have 45 days to pay the first year’s rent and one year to submit site assessment plans that describe the installation of meteorological towers and buoys to test the region’s winds. Once a site plan is approved, the companies will have 4 ½ years to submit wind farm plans, which would trigger more lengthy site-specific environmental reviews by BOEM.

Upon issuance of today’s leases, BOEM will have awarded 11 commercial offshore wind leases, including seven others through competitive lease sales.

Today’s lease sale come months after Deepwater Wind began construction on the nation’s first offshore wind project in Rhode Island state waters (Greenwire, July 28). The $225 million, 30-MW Block Island Wind Farm will have five turbines and is scheduled to begin producing energy next year.

Yet domestic development still lags far behind worldwide offshore wind growth.

The global offshore wind industry is poised to install 4,000 MW in 2015, a record for annual installations, according to a report issued by the Department of Energy in September.

It would bring global offshore wind capacity to 11,800 MW, or about one-fifth of the amount of land-based wind capacity in the United States.

As of late June, there were 21 offshore wind projects under development in the United States representing 15,650 MW, according to the report. Of those, about 5,900 MW have achieved “site control or a more advanced phase of development,” and about 3,300 MW are planned to be installed and operational by 2020.

The leases BOEM issued before today could support an estimated 5,768 MW, the report notes.

“The most pressing challenge that the U.S. offshore wind industry faces is the current high cost of offshore wind generation and the related lack of available [power purchase agreements] and/or state and federal policies to support the development of the industry,” the DOE report concluded.

New Jersey state lawmakers today advanced legislation that would require the Board of Public Utilities to open a “window” to solicit new proposals for a small wind project off Atlantic City, offering legislative support for pilot projects such as what was proposed by Fishermen’s Energy, the company said today.

“With this legislation, New Jersey is again positioned to take advantage of its leadership role in offshore wind and garner the economic development benefits of being a leader,” Paul Gallagher, the company’s chief operating officer, said in a statement.

Larger projects such as what are envisioned in federal leasing areas could benefit from the experience of smaller developments such as Fishermen’s, Gallagher said. The company’s pilot project off Atlantic City has been reconfigured to utilize Siemens’ wind turbines and traditional project financing to address concerns raised by the Board of Public Utilities, it said.