Photo: Derrick Jackson

Record-Smashing Auction Sets America on Course for Offshore Wind

, fellow | December 17, 2018, 3:00 pm EST
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This post is a part of a series on Clean Energy Momentum

There can be no more doubt on the promise of American offshore wind energy after Friday’s record-smashing federal auction of 390,000 acres of water far south of Martha’s Vineyard. A forlorn area that attracted no bids in 2015 from investors frustrated over the collapse of Cape Wind is now the Cinderella of energy, going in three parcels for a combined $405.1 million.

The winning suitors in the auction held by the Interior Department’s Bureau of Ocean Energy Management (BOEM) were Equinor, Mayflower Wind and Vineyard Wind. The individual sales of $135.1 million for one parcel and $135 million each for other two more than tripled the previous individual record of $42 million paid last year by Equinor for 79,350 acres of ocean 13 miles south of Long Island, New York.

The auction that began Thursday morning and ended Friday morning after 32 rounds, also obliterated several other records. Eleven separate companies participated nearly double the number competing in the Long Island auction. All three parcels went for more than $1,000 an acre, virtually doubling the $535 per acre Equinor paid last year.

By mind-blowing contrast, two adjacent parcels that did sell in the ill-fated 2015 auction went for $1.50 an acre and 90 cents an acre.

Long-time, and often long-suffering, experts who have watched the United States fall 20 years behind Europe in the development of offshore wind were nothing less than shocked. “No way did I think that these parcels would go for these prices,” said Stephanie McClellan director of offshore wind initiatives at the University of Delaware. Even BOEM Acting Director Walter Cruickshank said in a press call he was “blown away.”

For them to be shocked speaks to the magnitude of the sale of an area that, if fully developed with the rapidly growing power of individual turbines, could generate close to 5,000 megawatts of power, providing electricity equivalent to the demands of more than 2.5 million New England households, according to Union of Concerned Scientists estimates.

A key reason, Cruickshank, said, was leadership in Massachusetts.  Even though Cape Wind, a 130-turbine, 400-megawatt project on the scale of European wind farms, was killed off by a decade of lawsuits and criticism over its cost, the groundwork the state laid now has New England standing at the clear epicenter of the first wave of US offshore wind farms.

A major part was the building of a $100 million marine port terminal capable of loading the massive components of skyscraper-high machines onto installment ships. The state also conducted extensive ocean surveys and stakeholder meetings to anticipate impacts on wildlife and fishing. The federal sites auctioned off since Cape Wind are much farther out to sea, defusing debates about wind farms ruining scenic views.

Even as Cape Wind faded, the price of offshore wind in Europe, combined with the need for renewable energy created by state mandates and targets to slash gases fueling climate change, kept alive hopes for the industry. In March 2016, in a study many observers felt rekindled investor confidence and political will in Massachusetts, McClellan and Willett Kempton, research director of the University of Delaware’s Center for Carbon-free Power Integration, determined that offshore wind farms could quickly get their energy price to compete with fossil fuels.

By summer, the state legislature came together on an energy bill signed by Governor Charlie Baker (who had opposed Cape Wind), mandating 1,600 megawatts of offshore wind energy. That mandate ignited an explosive competition. New York has pledged 2,400 megawatts, New Jersey has a target of 3,500 megawatts and Maryland, Rhode Island and Connecticut all have significant plans and commitments for offshore wind.

Despite the fact that the only current offshore wind farm consists of five turbines and 30 megawatts off Block Island, the East Coast now has about 10 gigawatts of state targets that have the potential of providing electricity equivalent to the demands of more than 5 million households. That also means thousands of jobs. A report by Northeast state clean energy agencies estimates that a pipeline of 8 gigawatts’ worth of projects could create 16,700 jobs for work that would almost certainly have to be done in the United States, such as building foundations, laying cable and assembly.

And the price of producing offshore wind energy has come down so much that the proposed 800 MW Vineyard Wind project from an earlier auction of Massachusetts waters is projected by the state to save rate payers $1.4 billion over its 20-year contract. The prospects are so bright, even the Trump administration has found a soft spot for offshore wind amid its otherwise ceaseless attacks on environmental protection and climate science. Ethics-plagued Interior Secretary Ryan Zinke, the face of the White House’s effort to open up federal lands for fossil fuel drilling and mineral mining before he announced his resignation Saturday, said of Friday’s auction, “With bold leadership, faster, streamlined environmental reviews, and a lot of hard work with our states and fishermen, we’ve given the wind industry the confidence to think and bid big.”

That is a rare statement from this administration on which green energy advocates can applaud. Saying that today’s auction shows that “developers with large balance sheets believe that this market is going to be huge, and will be profitable,” Kempton added, “If they can make money selling electricity at below market prices, with it being near-zero carbon emissions, everyone wins.”

One of the biggest winners behind the scenes was Bill White. He was the longtime director of offshore wind for the Massachusetts Clean Energy Center, established under Governor Deval Patrick. Recently, he left the agency to become North American offshore wind director for the German offshore wind developer EnBW. His firm was a top participant in the auction, being the last to drop out.

While melancholy about that, White was nothing short of ecstatic overall. Offshore wind is now so attractive that some of the world’s fossil fuel giants, which long have enraged environmentalists and local leaders with the pollution of their extractive operations, are muscling in to this renewable form of Mayflower Wind is a collaboration that includes Shell. Equinor is the former Statoil.

“I remember almost literally begging companies to bid a few years ago,” White said. “I don’t think anybody would have predicted that this many companies, including oil and gas companies and utilities would be bidding. And none too soon with climate change being far worse than ever.

“I was so excited about our chances in the auction after yesterday, I couldn’t sleep and went for a 5 AM run. I’m disappointed we didn’t win, but what a roller coaster. I’m so proud to see this market come of age.”

If a loser is this excited, then the nation truly stands to be a winner with the advent of offshore wind.

Photo: Derrick Jackson
Photo: Derrick Jackson
Photo: Derrick Jackson
Photo: Derrick Jackson
Photo: Derrick Jackson

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