First US offshore wind public sale in Gulf of Mexico attracts meager curiosity

Aug 29 (Portal) – The Biden administration’s first-ever public sale of offshore wind vitality improvement rights within the Gulf of Mexico ended Tuesday with a single bid of $5.6 million, reflecting low demand for the clear vitality supply in a area recognized for its oil and gasoline manufacturing.

German firm RWE (RWEG.DE) received rights to 102,480 acres (41,472 hectares) off Louisiana — the bottom successful bid for a state offshore wind lease at an public sale for the reason that Obama administration — whereas the opposite two leases off Texas on provide had no bids acquired. in line with outcomes revealed on-line by the US Bureau of Ocean Power Administration.

The public sale was by far the weakest of the 4 auctions since President Joe Biden took workplace in 2021, by which he pledged to push the business ahead as a part of his local weather change agenda.

Biden’s authorities goals to offer 30 gigawatts (GW) of offshore wind energy by 2030, and the House Workplace mentioned the three Gulf leases on provide collectively have the potential to account for greater than 10% of that quantity.

“It’s superb how dangerous the economics should clearly be for 2 of the three websites to stay unsold … and the positioning that was offered is on the market at such a low worth,” mentioned Alon Carmel, Companion at PA Consulting, the Offshore -Advises wind energy corporations.

An RWE spokesman mentioned the sale was “an amazing alternative to get into the Gulf offshore wind business from the bottom up,” noting that the primary lease gross sales within the Atlantic had related holdings and costs.

RWE is among the world’s largest offshore wind builders with an intensive portfolio in Europe and has additionally secured leases off the coasts of California and New York.

French vitality large TotalEnergies (TTEF.PA), which develops offshore wind tasks in different US areas, is amongst corporations which have determined to sit down on the sale regardless of qualifying for a proposal.

“Our evaluation, considering wind speeds, competitors from different onshore renewables and aggressive electrical energy market situations, doesn’t justify submitting a bid at the moment,” a spokesman mentioned in an announcement.

INTEREST ELSEWHERE

The February 2022 sale of offshore wind leases off New York and New Jersey attracted bids within the billions, whereas newer auctions for land off the Carolinas and California coasts raised lots of of thousands and thousands of {dollars}.

Many of those states have enacted legal guidelines that require utilities to buy electrical energy from offshore wind tasks — rules thought of essential to a know-how estimated to provide twice the electrical energy of a pure gasoline facility.

The decrease wind speeds, delicate soil and hurricanes within the Gulf are thought of challenges for the business. Electrical energy costs are additionally low within the Southeast, which may make it tougher for dearer offshore wind generators to compete for electrical energy contracts.

The sale additionally comes at a tough time for offshore wind energy.

In latest months, homeowners of a number of proposed tasks within the Northeast have tried to renegotiate or cancel energy provide contracts amid hovering value inflation. Many of those corporations have been certified to bid for leases within the Gulf of Mexico.

RWE mentioned the Louisiana lease is engaging as a result of the state has robust coastal port and provide chain infrastructure and has a aim of putting in 5 gigawatts of offshore wind capability by 2035. Texas doesn’t have an offshore wind vacation spot.

“Right now’s public sale outcomes display the necessary position authorities insurance policies play in creating the offshore wind market,” Liz Burdock, CEO of the Enterprise Community for Offshore Wind, mentioned in an announcement.

The sale was described by the Biden adm
inistration as an necessary milestone for the business.

“Right now’s lease sale marks an necessary milestone for the Gulf of Mexico area — and for our nation — within the transition to a clear vitality future,” mentioned Elizabeth Klein, director of the Bureau of Ocean Power Administration (BOEM).

She mentioned the Louisiana lease has the potential to offer electrical energy to about 435,400 properties and create lots of of jobs.

Fifteen corporations certified to bid on the sale, in line with a BOEM doc.

These included offshore wind improvement arms of European vitality corporations Equinor (EQNR.OL) and Shell (SHEL.L), which additionally function oil and gasoline operations within the Gulf.

Reporting by Nicholas Groom; Adaptation by Marguerita Choy, Nick Zieminski and Daniel Wallis

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