Md. lease sale sees record bidding
And bids continue to roll in.
As of press time, at least two firms continued to bid on the 80,000-acre wind energy area about 10 miles from shore, where scientists estimate breezes could generate up to 1,450 megawatts of power.
Two companies have bid $4.8 million on the 32,737-acre northern lease area. One company remained in the bidding for the 46,970-acre southern lease area, where the high bid totaled $5.4 million.
The Bureau of Ocean Energy Management has not disclosed the names of the companies. Sixteen firms hadqualified to bid.
The online auction has shattered records for the fledgling industry.
In BOEM’s first competitive offshore wind auction a year ago, Deepwater Wind New England LLC paid $3.8 million for the right to develop two leases totaling 165,000 acres off the Rhode Island and Massachusetts shores (Greenwire, Aug. 1, 2013).
In the next auction in September 2013, Dominion Virginia Power bid $1.6 million for a single 113,000-acre tract about 25 miles off the Virginia shore (E&ENews PM, Sept. 4, 2013).
Those two auctions ran 11 and six rounds, respectively. Today’s auction had lasted 17 rounds as of press time, signaling high interest among bidders.
“It’s reflective of the policy decisions Maryland has made,” said Andrew Gohn, senior clean energy program manager for the Maryland Energy Administration. “It’s clear to bidders that Maryland has really prioritized offshore wind.”
Chief among those policy drivers is the Maryland Offshore Wind Energy Act, which the Legislature passed in spring 2013 to create incentives for offshore wind farms, Gohn said.
Maryland had already enacted a law requiring that it get 20 percent of its electricity from renewable sources by 2022.
The offshore wind bill requires electricity suppliers to purchase offshore wind renewable energy credits and carves out up to 2.5 percent of the state’s energy supply for offshore wind energy. Offshore wind farms may be approved by state regulators as long as they do not raise monthly residential electricity rates by more than $1.50 and are shown to provide positive net economic, environmental and health benefits to Maryland residents, among other provisions.
“It’s the major driver,” Gohn said. But he added that Maryland had also established an offshore wind development fund, provided a high-resolution map of the lease area’s seafloor, conducted ecological surveys and worked on port infrastructure.
In today’s auction, BOEM is considering both monetary and nonmonetary factors to determine a winner. For example, a company with a buyer for its power or a Maryland Public Service Commission-issued offshore renewable energy certificate would receive special consideration.
Nancy Sopko, an ocean advocate for Oceana, said this morning that today’s sale is “further proof” of Maryland Gov. Martin O’Malley’s (D) and the Obama administration’s support of offshore wind. She cautioned, though, that developers will need Congress to extend the expired investment tax credit to demonstrate the federal government’s long-term committment.
The Obama administration has issued five wind leases off the Atlantic coast. In addition to the competitive leases issued in Rhode Island, Massachusetts and Virginia, it has issued noncompetitive leases in Massachusetts and Delaware.
The Cape Wind project in Nantucket Sound off Massachusetts is considered the closest to development.