First West Coast offshore wind power lease auction earns $757.1 million in high bids

The first federal offshore wind energy lease auction in the Pacific region drew competitive bids from five companies that totaled $757.1 million, exceeding the first lease sales in the Atlantic region, the Department of the Interior announced Dec. 7.

The auction, which kicked off Dec. 6 and continued into Dec. 7, offered five lease areas off the California coast that have the potential to produce more than 4.6 GW of offshore wind energy. It was the third Bureau of Ocean Energy Management lease sale this year and the first that will require floating turbine technology to develop.

"Offshore wind is a critical component to achieving our world-leading clean energy goals and this sale is an historic step on California's march toward a future free of fossil fuels," California Governor Gavin Newsom said in a statement. "Together with leadership from the Biden-Harris Administration, we're entering a new era of climate action and solutions that give our planet a new lease on life."

The California Energy Commission set a preliminary goal of up to 5 GW of offshore wind by 2030 and 25 GW by 2045.

"This lease sale marks a major milestone in California's vision to boldly confront the climate crisis and make offshore wind a reality on the west coast," Commission Chair David Hochschild said in a statement. "Offshore wind is capable of supplying much needed renewable energy to our electric grid while creating a new industry, supply chain, and good-paying jobs. California looks forward to continued close engagement with lessees, tribes, labor, coastal communities, fisheries, environmental organizations and other stakeholders as we advance toward our state's 25 GW offshore wind planning goal."

This auction commits substantial investment to support economic growth from floating offshore wind energy development – including the jobs that come with it, BOEM Director Amanda Lefton said in a statement.

Auction results

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-acre 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.

Also near Morro Bay, the 80,062-acre parcel OCS-P 0563 was won by Equinor Wind US for $130 million.

"We are delighted to get the opportunity to explore the potential for producing even more renewable energy for the US, this time in the Pacific Ocean," Equinor Wind US President Molly Morris said in a statement. "The US West Coast is one of the most attractive growth regions for floating offshore wind in the world due to its favorable wind conditions and proximity to markets that need reliable, clean energy."

Off the northern coast, the 69,031-acre parcel OCS-P 0562 was won by California North Floating for $173.8 million, while RWE Offshore Wind Holdings won the 63,338-acre parcel OCS-P 0561 with a bid at $157.7 million.

"Our success in California is a milestone achievement, RWE's first-ever awarded commercial scale floating offshore wind project," Sven Utermöhlen, CEO Offshore Wind of RWE Renewables, said in a statement. "We will apply our floating wind knowledge and experience in California and continue to develop the market for future projects."

RWE was also a qualified bidder for two commercial floating projects off the French coast, is preparing to participate in a wind tender in Norway and is looking at floating wind opportunities in the Asia-Pacific region.

"California is a natural next frontier for offshore wind development, not only in the US market, but globally," Sam Eaton, executive vice president of Offshore Development Americas, RWE Renewables, said in a statement.

Floating technology

Unlike the East Coast, the California Coast drops off and gets very deep very quickly, so offshore wind in California has to be floating and installed at pretty significant depths.

"The California lease sale gives the US a chance to lead the emerging floating wind sector," National Ocean Industries Association President Erik Milito said in a Dec. 7 statement. "Floating wind technology in its early stages but it is an advanced technology that will lead to strong growth in the deployment of offshore wind. The timely scaling and deployment of floating wind technology will be vital in meeting US and global renewable energy goals."

The US is well-positioned to develop its deepwater wind resources and become a global hub of floating wind innovation, Milito added, adding the US is only at step one of US floating wind leadership.

"The Biden-Harris administration believes that to address the climate crisis head on, we must unleash a new era of clean, reliable energy that serves every household in America," Interior Secretary Deb Haaland said in the statement. "Today's lease sale is further proof that industry momentum – including for floating offshore wind development – is undeniable."

While the sale marks an important moment for floating offshore wind in US waters, industry and public stakeholders must quickly to build a strong domestic supply chain to support the new industry and advance the port and transmission infrastructure necessary to ensure market readiness, Business Network for Offshore Wind CEO and founder Liz Burdock said in a statement.

"The future is floating and today represents a significant milestone for the US offshore wind industry as it builds toward the Biden Administration's goal of deploying 30 GW of offshore wind energy by 2030 and 15 GW of floating offshore wind energy by 2035," Burdock said. "By tapping into the vast wind resources along our country's Pacific Coast, we can cement the US as a global leader in floating offshore wind technology and supercharge our deployment of clean, affordable, and reliable wind power. "