Deepwater Wind wins offshore wind rights in Interior lease sale

Deepwater Wind New England LLC has won the Interior Department’s first-ever competitive lease sale for offshore wind rights.

Interior’s Bureau of Ocean Energy Management (BOEM) Director Tommy Beaudreau announced July 31 that the department had auctioned two leases for a Wind Energy Area of 164,750 acres offshore Rhode Island and Massachusetts for wind energy development.

The sale received $3.83m in high bids. The auction lasted 1 day, consisting of 11 rounds before determining the provisional winner. In addition to Deepwater Wind New England, the following companies participated in the auction: Sea Breeze Energy, and US Wind.

Deepwater plans project with up to 1,000-MW capacity

On its website, Deepwater Wind said its Deepwater Wind Energy Center (DWEC), would have up to 200 turbines with a regional transmission system linking Long Island, New York, to southeastern New England.

If approved and completed, the project would have a capacity of up to 1,000 MW, Deepwater Wind said.

“This is an enormous step forward for the industry. This is the best site for offshore wind in the United States, bar none,” said Deepwater Wind CEO Jeffrey Grybowski. “Our Deepwater Wind Energy Center Project will produce clean power and jobs for an entire region. It’s very exciting.”

Deepwater Wind previously paid a $900,000 deposit to participate in the auction. Deepwater Wind will pay the federal government annual rent payments of approximately $500,000 beginning this year, until a wind farm is operational on the site. Once the wind farm is operational, Deepwater Wind is obligated to pay the federal government an annual royalty fee based on the value of the energy produced, the company said.

Deepwater Wind is also actively developing the 30 MW Block Island Wind Farm, about three miles off the coast of Block Island, R.I. The permits for this demonstration-scale wind farm are currently under review by state and federal agencies. Construction activities are expected to start in 2013, with the wind farm in service by 2015.

Interior offers details on process

BOEM auctioned the Wind Energy Area offshore Rhode Island and Massachusetts as two leases, referred to as the North Lease Area (Lease OCS-A0486) and the South Lease Area (Lease OCS-A0487). The North Lease Area consists of about 97,500 acres and the South Lease Area covers about 67,250 acres.

The Wind Energy Area is located 9.2 nautical miles south of the Rhode Island coastline and has the potential to support 3,395 MW of wind generation. BOEM will hold its next competitive lease sale for offshore wind on Sept. 4, which will auction nearly 112,800 acres offshore Virginia, and is expected to announce additional auctions for Wind Energy Areas offshore Massachusetts, Maryland, and New Jersey later this year and in 2014.

Following the auction, the Attorney General, in consultation with the Federal Trade Commission, will have 30 days in which to complete an antitrust review of the auction. Shortly thereafter, BOEM will send unsigned copies of the lease form to the winning bidder, who will have 10 days to sign and return the lease, file required financial assurance, and pay the balance of the winning bid. Each lease will have a preliminary term of 6 months in which to submit a Site Assessment Plan to BOEM for approval. A Site Assessment Plan describes the activities (e.g., installation of meteorological towers and buoys) a lessee plans to perform for the assessment of the wind resources and ocean conditions of its commercial lease.

After a Site Assessment Plan is approved, the lessee will have up to 4 and 1/2 years in which to submit a Construction and Operations Plan (COP) for approval, which provides a detailed plan for the construction and operation of a wind energy project on the lease. After the COP is approved, the lessee will have an operations term of 25 years.

Renewable energy advocates have high hopes of development an offshore wind industry in the United States.

The bureau had first announced the auction in June. This auction represents the first competitive lease sale for renewable energy on the U.S. Outer Continental Shelf (OCS).

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.