Interior support could net $1.2B in revenue — report
The offshore wind industry could produce an extra $1.2 billion in Treasury revenues through 2021 and tens of thousands of new jobs in subsequent years, but Interior Department officials would need to “act quickly” to issue leases to developers, according to analysts at Wood Mackenzie.
In a report this week sponsored by offshore wind advocates, the energy researcher estimated that 2 million acres of federal waters — all of which is already being vetted by Interior for development — could prove viable host sites for wind turbine projects.
“If relevant policy can be put in place, if [the Bureau of Ocean Energy Management] and other industry parties can act quickly, there are potentially 2 million acres of federal waters in those areas that can be auctioned,” said Feng Zhang, managing consultant at Wood Mackenzie.
The vast majority of that acreage lies in the New York Bight, off the coast of New York and New Jersey. BOEM, the Interior agency that oversees lease arrangements for offshore turbines, hasn’t auctioned off new areas since 2018.
On a phone call this week hosted by advocates at the American Wind Energy Association, Special Initiative on Offshore Wind, Alliance for Clean Energy New York and National Ocean Industries Association, Zhang and other analysts at Wood Mackenzie presented a case for awarding new leases.
The 1.7 million acres under review by BOEM in the New York Bight could be auctioned off as soon as this year, they argued. And large state-level mandates for offshore wind power purchases in New York and New Jersey won’t be feasible without additional action from the federal government.
“The targets are so high in the Northeast, in New York and New Jersey, that an additional number of leases are needed to satisfy them,” said Maxwell Cohen, a principal analyst for power and renewables at Wood Mackenzie.
If deepwater areas in California and Maine were auctioned off in addition to the shallower areas considered more immediately viable, he and other analysts said, the leases could deliver $2 billion by 2022 in revenues to the Treasury and support turbines that would power 20 million homes.
“For the offshore wind industry to be a robust, competitive industry, more lease areas are going to be needed,” said Cohen. “And there are a number of companies champing at the bit to get into this industry.”
A BOEM spokesperson did not respond directly to the estimates in Wood Mackenzie’s report, saying that the agency “does not have a formal schedule” for lease auctions and continues to work with other government agencies to reduce the industry’s conflicts with other ocean uses.
Still, even if BOEM officials put more areas on the table for development, the industry’s fitful progress toward getting new turbines in the water has provided plenty of examples of hurdles. And outside of the Northeast states where the industry has taken root most firmly, there’s likely to be original barriers.
In the Carolinas, for instance, the grid in rural coastal areas may lack much of the capabilities needed to handle large infusions from offshore turbines. In Maine and California, the waters are too deep to act as host sites for conventional fixed-bottom turbines, and some analysts think that floating turbine varieties may not be commercialized until the end of the decade.
Offshore wind jobs may not prove a major aid in a post-pandemic recovery either: The 80,000 estimated positions that would be created by widespread auctions, according to Wood Mackenzie, would accumulate beginning in 2025. And the bulk of them would be concentrated in a handful of Northeast states, it noted.
Still, the report comes with the latest bit of pressure from industry, whose ranks have grown in recent years to include oil and gas majors and large utilities based both in the U.S. and abroad.
Analysts also highlighted a potential role for two state governments in advancing the industry. In North and South Carolina, where BOEM has weighed interest in offshore areas, governments would likely receive much higher bids from turbine developers if they instituted Northeast-style mandates that guarantee an off-taker, according to the report.
“If policy changes in North Carolina and South Carolina, the lease price could go higher and generate a lot more [revenue],” said Zhang.