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Norway's Statoil wins New York offshore tender with $42m bid

Norway's Statoil submitted a winning $42.5m bid to gain commercial development rights to a high-profile offshore wind zone that could feed power to New York City, setting a US industry record after 33 rounds of bidding in a lease auction that spilled over into a second day.

Statoil says the zone could accommodate more than 1GW of offshore wind capacity, and it would likely start with a 400-600MW development. New York state has a 50% renewables target for 2030, and has been vocal about its intention to procure substantial amounts of offshore wind power.

The first project could be operating by the early 2020s, a Statoil spokesperson tells Recharge.

Irene Rummelhoff, Statoil´s executive vice president for New Energy Solutions, says: “As today’s announcement shows, Statoil is well positioned to take part in what could be a significant build out of offshore wind in New York and other states over the next decade.”

“The US is a key emerging market for offshore wind – both bottom-fixed and floating – with significant potential along both the east and west coasts."

The New York zone has been seen as the most attractive tendered in US waters so far, given its proximity to the greater New York City metropolitan region, the largest electric load on the east coast. As a result, analysts had forecast that the lease sale would be more competitive than five earlier ones held for zones facing states along the US Atlantic coast.

But few expected such intense levels of competition, with bidders driving the cost to $42.5m, shattering the previous record winning bid for a US offshore wind zone of $8.7m, paid by US Wind for a lease area off Maryland in 2014.

The US Bureau of Ocean Energy Management (BOEM), which held the New York auction, set the initial asking price at just $158,700.

Aside from Statoil, other bidders in New York included Avangrid Renewables, Dong Energy, Innogy US Renewable Projects, New York State Energy Research and Development Authority (NYSERDA) and Germany's wpd.

The inclusion of NYSERDA, a state entity, was one unusual feature of the New York tender. NYSERDA's plan was to win the tender, de-risk the project, including helping secure an off-take agreement, and then tender the zone back out for a second time to private developers.

NYSERDA explains decision to participate in NY offshore auction

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In a statement, Rummelhoff said Statoil will "work closely" with NYSERDA as it studies the zone and then brings projects through permitting, and also while evaluating its "power off-take options".

Statoil's spokesperson said that given New York's ambitious renewables target, the company does not expect challenges in securing an off-take deal.

The New York zone is 14-30 miles (30-60km) offshore, spans 127 square miles (320 sq km), and covers water depths of 65 metres to 131 metres.

"This auction underscores the growing market demand for renewable energy among our coastal communities,” says Sally Jewell, secretary of the Department of Interior. BOEM, part of DOI, manages offshore wind development on the outer continental shelf beyond state territorial limits.

“It not only marks another milestone for the US offshore wind energy program, but also demonstrates how our collaborative efforts with state, local and private sector partners can advance a clean energy future in the United States."

The New York area is spread over five full Outer Continental Shelf blocks and 143 sub-blocks, extends 24 nautical miles southeast from its western edge and is 11.5 nautical miles at its longest portion in shallow waters.

The lease will have a preliminary term of one year, during which Statoil may submit a Site Assessment Plan (SAP) to BOEM for approval. The SAP will describe the facilities it plans to install or deploy for the assessment of the wind resources and ocean conditions of the lease zone.

Following approval of a SAP, Statoil will then have four and a half years to submit a Construction and Operations Plan (COP) to BOEM for approval. This plan will provide a detailed proposal for construction and operation of a wind energy project within the lease area.

Once BOEM receives a COP, it will conduct an environmental review of the proposed project and reasonable alternatives. Public input will be an important part of BOEM’s review process. If BOEM approves the COP, Statoil will then have a term of 25 years.

Second time successful

Statoil has been looking to penetrate the emerging US offshore wind market since pulling the plug in 2013 on a $120m pilot project to place four 3MW turbines on floating spar-buoy structures about 12 miles off the coast of Maine.

Statoil won US Department of Energy project funding support for the project but ran into opposition from Maine Governor Paul LePage, who favoured a competing proposal backed by the University of Maine.

Beyond New York, Statoil is eying other opportunities in the US. In October, it informed BOEM that it might want to lease both the 240-sq-mile (621.6 sq km) Oahu North and 517-sq-mile Oahu South zones off Hawaii’s most populous island.

Both zones would require use of floating foundations for turbines, given the water depths involved. Statoil has been developing and successfully testing its spar foundation technology since last decade.

The agency has not said when it could hold a lease auction for one or both of the zones there.

Another potential site in the Pacific Ocean is off the coast of California, where officials led by Governor Jerry Brown want to explore possible ways to develop what would be a new and immense source of clean energy.

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