US Completes First Offshore Wind Auction, Second Set For September

In a historic moment for the industry, Deepwater Wind outbid two other developers to win the first-ever US auction of federal waters for offshore commercial wind development.

As the provisional winner after 11 rounds of bidding, Deepwater Wind will pay $3.8 million for two leases from the Interior Department, covering 164,750 acres approximately 17 miles south Rhode Island, between Block Island, Rhode Island and Martha’s Vineyard, Massachusetts.

Deepwater plans to use the site for its Deepwater Wind Energy Center, the biggest offshore wind project ever proposed in US waters. The 1 gigawatt wind farm will have 200 turbines and a regional transmission system linking the facility to New York State and southeastern New England, powering up to 350,000 homes.

“This is an enormous step forward for the industry. This is the best site for offshore wind in the United States, bar none,” says Deepwater Wind CEO Jeffrey Grybowski.

Construction on the farm could begin in 2017, with power production targeted for early 2018. Project costs are estimated at $5 billion.

By building most of the turbines at least 20 miles from land, Deepwater Wind hopes to make them virtually invisible, avoiding the complaints about aesthetics that have plagued the Cape Wind project. The closest turbine will be 13 miles away.

“When you think about the enormous energy potential that Atlantic wind holds, this is a major milestone for our nation,” says Interior Secretary Sally Jewell. “A lot of collaboration and thoughtful planning went into getting to this point, and we’ll continue to employ that approach as we move forward up and down the coast to ensure that offshore wind energy is realized in the right way and in the right places. Offshore wind is an exciting new frontier that will help keep America competitive, and expand domestic energy production, all without increasing carbon pollution.” 

The next lease sale is planned for Sept. 4, for 112,800 acres near Virginia Beach, Virginia.

Additional auctions are planned for offshore areas near Massachusetts, Maryland, and New Jersey in 2013 and 2014. The areas were selected under the Interior Department’s "Smart from the Start" initiative.

The map below shows the area covered under the leases sold this week. You can view the other areas to be auctioned on the Bureau of Ocean Energy Management’s Web site.

Deepwater Lease

Deepwater Wind will pay $500,000 annually for the leases near New England, starting this year. After the farm is operational, it will also pay an annual royalty to the federal government based on the value of the electricity produced at the facility.

In its press release about the auction results, the developer says the power price for electricity from the farm will be competitive with power generated from fossil fuels and lower than that offered by the first generation of offshore wind farms.

During the bidding process, Deepwater Wind received a credit from its decision to structure its bid as a joint development agreement with the state of Rhode Island – which may help it better negotiate and manage any environmental or economic objections that arise along the way.

The company is also developing the 30 MW Block Island Wind Farm, a demonstration-scale facility three miles off the coast that is on schedule to become the first US offshore wind farm. The permits for the farm are under review, with construction expected to start by the end of 2013.  

Research shows that harnessing even a fraction of the potential 52 GW of wind capacity off the Atlantic coast could power the entire east coast, generating $200 billion in economic activity.

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