Central Atlantic Offshore Wind Auctions and Recent Offshore Wind Updates
On August 14, 2024, the United States Bureau of Ocean Energy Management (“BOEM”) held its Central Atlantic offshore wind auction for two lease areas off the coasts of Delaware, Maryland and Virginia. The auction lasted seven rounds and resulted in two provisional winners: Equinor Wind US LLC and Virginia Electric and Power Co, with the winning bids totaling $92.65 million. Shortly after the auction on August 22, 2024, BOEM published a Call for Information and Nominations to assess public interest in additional lease areas in the Central Atlantic – Central Atlantic 2.
Central Atlantic Offshore Wind Auction
During the auction, BOEM offered two leases totaling 277,948 acres – a 101,443-acre area offshore the States of Delaware and Maryland (“OCS-A 0557”) and a 176,505-acre area offshore the Commonwealth of Virginia (“OCS-A 0558”) (see maps below). As a result of the auction, Equinor Wind US LLC and Virginia Electric and Power Co, respectively, provisionally won OCS-A 0557 at $75,001,001, and OCS-A 0558 at $17,650,500. Seventeen entities were qualified to bid in the auction and six of them participated. The lease areas combined have the potential to provide power for almost 2.2 million homes.
Source: https://www.boem.gov/renewable-energy/state-activities/central-atlantic
As part of the bid, the provisional winners earned bidding credits totaling approximately $23 million, which is equal to 25 percent of the total winning bids. Those bidding credits are granted to the provisional winners in exchange for their financial commitments to (1) support the offshore wind energy industry, either through workforce training programs, the development of a domestic supply chain, or a combination of both; and (2) establish and contribute to a fisheries compensatory mitigation fund to mitigate the potential adverse effects for commercial and for-hire recreational fisheries resulting from offshore development in the Central Atlantic. As contemplated in the final sale notice in relation to the auction issued by BOEM, each 12.5 percent will be contributed to (1) and (2) above respectively.
What to Expect after the Auction
The leases are also subject to federal antitrust laws, and, within 30 days of the auction, the U.S. Department of Justice will conduct an antitrust review of the result of the auction. If there are no issues identified, BOEM will send each provisional winner a copy of the lease and they will have 10 business days to post financial assurance, pay any outstanding balance of their winning cash bid, and sign and return the lease. Once BOEM receives the signed leases and verifies all other obligations have been fulfilled, it will execute the leases. The leases would have an operations term of 33 years.
The leases awarded in the auction provides the provisional winners with the right to conduct certain site characterization activities, submit a Site Assessment Plan (if necessary), and submit a Construction and Operation Plan (“COP”) for the Project for BOEM’s review. Once the COPs are submitted, BOEM will develop environmental impact statements to analyze the specific impacts of the COPs before making decisions on whether to approve the projects as planned.
Round Two: The Next Round of Central Atlantic Offshore Wind Auctions
On August 22, 2024, BOEM published a call for information and nomination (the “Call”) to assess the public interest in additional lease areas in the Central Atlantic – Central Atlantic 2, seeking public comments for a 60-day period ending at 11:59 p.m. Eastern Time on October 21, 2024. The call area consists of 13,476,805 acres off the coasts of New Jersey, Delaware, Maryland, Virginia, and North Carolina (see map below). BOEM will review commercial nominations and public comments submitted during the period and narrow down an appropriate location to draft wind energy areas. After completing those processes, BOEM expects to propose a competitive lease auction for the final wind energy areas.
Source: https://www.boem.gov/sites/default/files/images/central_atlantic_2_call_area_map.png
Other U.S. Offshore Wind Updates
Offshore Wind Leases in Oregon
On August 13, 2024, BOEM finalized its Environmental Assessment (“EA”) of the possible impacts from issuing leases of the Wind Energy Areas located in offshore Oregon.
On April 30, 2024, the U.S. Department of the Interior announced proposed offshore wind lease auction details for the Oregon WEAs. The two WEAs total 194,995 acres: (1) the Coos Bay Wind Energy Area consisting of 61,203 acres and located approximately 32 miles offshore (“OCS-P 0566”) and (2) the Brookings Wind Energy Area consisting of 133,792 acres and located approximately 18 miles offshore (“OCS-P 0567”) (see map below). Combined, the WEAs have the potential to power more than one million homes. BOEM published its draft EA in May 2024 and the public comment period for the draft ended on June 14, 2024. The finalization of the EA is the final step of BOEM’s planning process of the auction, and it is expected that the auction will be held later in 2024. A final sale notice will be published at least 30 days prior to the auction, detailing the time and date of the auction and qualified participants.
Status update on states’ offshore wind solicitations for PPAs and ORECs
Delaware offshore wind solicitation: On July 1, 2024, the State of Delaware passed the Delaware Energy Solutions Act of 2024 (“DESA”) in order to create a framework for the state’s solicitation process to procure between 800 and 1,200 megawatts of electricity generated from offshore wind projects. The state will hold a solicitation process pursuant to the DESA, although the details have not been released.
Connecticut-Massachusetts-Rhode Island offshore wind solicitation: On August 6, 2024, it was announced that the bid selection and contract negotiations for the combined Connecticut-Massachusetts-Rhode Island offshore wind solicitation have been delayed. The states moved the bid selection from August 7, 2024, to September 6, 2024, the execution of long-term contracts from October 9, 2024, to November 8, 2024, and the submission of the contracts for state agency approval from November 13, 2024, to December 18, 2024.
Bids were received from Ørsted, Avangrid Renewables, SouthCoast Wind Energy, and Vineyard Offshore in May 2024, however the states decided that additional time was needed to consider any impacts to the solicitation arising from the $389 million in federal grant awarded to the states through the DOE’s Grid Innovation Program. The grant provides funding to upgrade electric infrastructure in the region, including the onshore transmission system to accommodate 4,800 megawatts of additional offshore wind capacity.
New York OREC solicitation: On July 17, 2024, the New York State Research and Development Authority (“NYSERDA”) issued a request for proposals for the state’s fifth competitive offshore wind solicitation for Offshore Wind Renewable Energy Certificates (“ORECs”). According to the schedule set by NYSERDA, the deadlines for submissions are September 9, 2024, for non-pricing information and October 18, 2024, for offer pricing, with provisional winners to be announced by November 8, 2024.
New Jersey OREC solicitation: New Jersey’s fourth offshore wind solicitation for ORECs was issued on April 30, 2024. The solicitation seeks to between 1,200 and 4,000 megawatts of offshore wind generation capacity. According to the schedule set by the state, the application for the solicitation closed on July 10, 2024, and the bid selection will be made in December 2024.
Maine offshore wind solicitation: In July 2023, the State of Delaware passed “An Act Regarding the Procurement of Offshore Wind Energy Resources”, which authorizes Maine Governor’s Energy Office (“GEO”) procure at least 3,000 megawatts of floating offshore wind installed by 2040. Maine GEO has stated that it aims to launch the public consultation process for the solicitation in early or middle of 2024, including issuing request for information to solicit input from stakeholders, with formal requests for proposals to be launched in 2026.
