U.S. BOEM Holds First Offshore Wind Auction in the Gulf of Maine
On October 29, 2024, the United States Bureau of Ocean Energy Management (“BOEM”) held a Gulf of Maine (ATLW-11) floating offshore wind auction for eight lease areas off the coasts of Maine, Massachusetts, and New Hampshire, which was the first commercial sale for floating offshore wind on the Atlantic Coast. The auction resulted in two provisional winners for four of the eight lease areas: Avangrid Renewables, LLC (“Avangrid”) and Invenergy NE Offshore Wind, LLC (“Invenergy”) were announced as provisional winners with the winning bids totaling over $21.9 million.
Gulf of Maine Offshore Wind Auction
During the auction, BOEM offered eight leases totaling approximately 850,082 acres (see map below):
- OCS-A 0562 with a total of approximately 97,854 acres;
- OCS-A 0563 with a total of approximately 105,682 acres;
- OCS-A 0564 with a total of approximately 98,565 acres;
- OCS-A 0565 with a total of approximately 103,191 acres;
- OCS-A 0566 with a total of approximately 96,075 acres;
- OCS-A 0567 with a total of approximately 117,780 acres;
- OCS-A 0568 with a total of approximately 124,897 acres; and
- OCS-A 0569 with a total of approximately 106,038 acres.
Although 14 companies were qualified to participate in the auction, the auction had few participants and ended after just one round of bidding. BOEM announced Avangrid as the provisional winner of OCS-A 0564 at $4,928,250 and OCS-A 0568 at $6,244,850, and Invenergy as the provisionally provisional winner of OCS-A 0562 at $4,892,700 and OCS-A 0567 at $5,889,000. Half of the lease areas included in the auction were not awarded, which were OCS-A 0563, OCS-A 0565, OCS-A 0566, and OCS-A 0569.
For the auction, the provisional winners earned bidding credits totaling approximately $5.4 million, which is equal to 25% of the total winning bids. The bidding credits are granted to the provisional winners in exchange for their financial commitments to: (1) support the floating 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 or contribute to an existing fund to mitigate the potential adverse effects for commercial and for-hire recreational fisheries resulting from floating offshore development in the Gulf of Maine. As contemplated in BOEM’s final sale notice for the auction, each 12.5% will be contributed to (1) and (2) above, respectively.
What to Expect After the Auction
The auction is 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 its respective lease and it 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 will have the updated lease period structure that was promulgated in BOEM’s Renewable Energy Modernization Rule, which was released in April 2024. The new lease period structure includes a five-year “preliminary period” before the lessee must submit its Construction and Operations Plan (“COP”). This is then followed by open-ended “COP review” and “design and construction” periods. When the project commences commercial operation pursuant to BOEM’s regulations (30 CFR 285.637), the “operations period” commences and runs for a 35-year term, which used to be a 25-year term under the old regulations. Pursuant to the Renewable Energy Modernization Rule, lessees may propose an even longer operations period in their COPs.
The leases awarded in the auction provide the provisional winners with the right to conduct certain site characterization activities, submit a Site Assessment Plan (if necessary), and submit a COP for their respective projects for BOEM’s review. Once the COPs are submitted, BOEM will analyze the projects pursuant to the National Environmental Policy Act and collaborate with other federal and state agencies to analyze the projects under and comply with various federal and state laws. In addition, lease stipulations require that the provisional winners make every “reasonable effort” to: (1) enter into a project labor agreement covering the construction stage of any project for their respective lease areas; (2) develop communication plans for engagement with Tribes, agencies, and fisheries; and (3) provide to BOEM semi-annual reports on engagement activities with Tribes and communities.
