RWE is only winning bidder in first US Gulf of Mexico offshore wind lease auction

RWE Offshore US Gulf had the only winning bid in the US Interior Department's first-ever offshore wind energy auction for the Gulf of Mexico on Aug. 29, winning the offshore Lake Charles, Louisiana, lease area, which has the potential to generate roughly 1.24 GW.

The company won with a $5.6 million bid and was the only active bidder in the second and final round of the auction.

"With today's success in the Gulf of Mexico, RWE continues to build its position in the US offshore wind industry," Sven Utermohlen, CEO of RWE Offshore Wind, said in a statement.

"Entering a new region in the Gulf is an exciting milestone to further deploy over 20 years of expertise across the value chain and deliver a new energy resource into the region," Utermohlen said, adding "we look forward to shaping this new market together with our stakeholders to activate the full potential of offshore wind for the region."

RWE's awarded site is 44 miles off the coast of Louisiana in water depths of 10-25 meters in an area with the potential to host up to 2 GW of incremental offshore wind power capacity. The project is expected to be in operation by the mid-2030s, depending on permitting timelines, the company said.

The two additional lease areas up for auction in Texas called Galveston I and Galveston II did not receive any bids. The two areas totaled nearly 200,000 acres and the bidding opened at $5,124,000 for Galveston I and $4,839,300 for Galveston II.

Auction activity

The auction administered by the Bureau of Ocean Energy Management wrapped up quickly in comparison to other recent federal offshore wind lease auctions, finishing after just two bidding rounds.

"While today's auction fell short of expectations, it is nonetheless a critical step for the energy transition on the Gulf Coast," Josh Kaplowitz, vice president of offshore wind at trade group the American Clean Power Association, said in a statement.

For offshore wind to develop in this region, it is critical to establish enforceable offtake mechanisms and incentives for innovative markets, such as green hydrogen, Kaplowitz added.

The Gulf region is a nascent market and looking back to the first lease sales in the Atlantic there is a similar trend in both "participation and price," RWE spokesperson Anna Russell Murray said in an email.

"We see a great opportunity to enter the Gulf's offshore wind industry at the ground floor and continue to work with partners to help shape the market," Murray said.

By comparison, a February 2022 federal offshore wind lease auction covering six areas totaling 488,000 acres in the New York Bight closed with high bids totaling $4.37 billion for all six lease areas.

The sale, which ran from Feb. 23 to Feb. 25 featured 64 bidding rounds, was the first federal offshore wind lease auction in nearly four years, and the first under the Biden administration. BOEM estimated the area has the potential for 5.6 GW-7 GW of offshore wind power generation.

Biden administration eyes 30 GW by 2030

Bight Wind Holdings, backed by National Grid Ventures and RWE Renewables, won the largest lease area, bidding $1.1 billion for the 125,964-acre parcel OCS-A 0539, according to BOEM.

The New York Bight is an offshore area in federal waters located between New Jersey and New York, states that have targeted developing offshore wind power capacities of 11 GW by 2040 and 9 GW by 2035, respectively.

Louisiana has set a target of 5 GW of installed offshore wind capacity by 2035 and Texas does not have a development target.

At the national level, the Biden administration has set a goal of developing 30 GW of offshore wind capacity by 2030.

Additionally, the first federal offshore wind energy lease auction in the Pacific region in December 2022 drew competitive bids from five companies that totaled $757.1 million. The auction, which featured 31 bidding rounds, included two lease areas of Northern California near Humboldt Bay and three lease areas off central California near Morro Bay.

Invenergy California Offshore and Central California Offshore Wind won the largest lease areas of 80,418 acres each. OCS-P 0565 was won by Invenergy California Offshore for $145.3 million, while Central California Offshore Wind won OCS-P 0564 for $150.3 million.

The Final Sale Notice for the Gulf lease sale listed over a dozen companies that were interested in bidding. Some of the bigger companies included Avangrid Renewables, Equinor, Invenergy, RWE Offshore, Shell New Energies, TotalEnergies Renewables, energyRe Offshore Wind Holdings, and two affiliates of the South Korean company Hanwha. Development in the eastern Gulf is off limits, partially due to longstanding concerns by the US Defense Department over interference with military operations in the northeastern Gulf.