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US to auction new offshore zones south of Massachusetts

The US government plans to begin a competitive leasing process for two large offshore wind development zones south of Massachusetts, after receiving unsolicited bids for the zones from units of Norway’s Statoil and Germany’s PNE Wind.

The two zones, collectively covering nearly 390,000 acres (158,000 sq km), were previously put to auction in early 2015, but did not receive any bids at that time. In that relatively uncompetitive auction two other zones south of Massachusetts were won by developers; those two zones are now the Bay State wind project (controlled by Dong Energy and local partner Eversource Energy) and the Vineyard Wind project (backed by Copenhagen Infrastructure Partners).

Thanks to a recent surge of interest and momentum in the US offshore wind market, however, the two unclaimed zones now have suitors.

Statoil, which late last year won a competitive auction for an offshore wind zone facing New York, and PNE Wind USA, a Chicago-based unit of German developer PNE Wind, have both requested to lease the two zones off Massachusetts, the Bureau of Ocean Energy Management (BOEM) announced Friday. 

Their requests have been processed by BOEM and deemed complete.

The two zones, known formally as OCS-A 0502 and OCS-A 0503, sit adjacent to -- and southwest of -- Vineyard Wind's leased area. (The two unclaimed zones are in brown and green on this map; Dong/Eversource's zone is in orange, and Vineyard Wind's in yellow.)

Giving the dueling requests for the Massachusetts zones, BOEM has “determined that competitive interest exists and plans to proceed with the competitive leasing process”.

In its request, Statoil said the two Massachusetts zones could hold at least 3GW of offshore wind, and perhaps much more than that, but Statoil would likely start development with a 400-600MW project. The water depth in the area is 40-60 metres.

A BOEM spokesperson tells Recharge there is no set time schedule for a potential lease sale for the Massachusetts zones, noting it is usually a "multi-year effort".

That said, because "extensive planning" has already been completed for the two Massachusetts areas, "BOEM anticipates a reduced amount of time will be necessary to complete the leasing process", the spokesman says. 

PNE also seeking New York zone

Separately, PNE also requested to lease a 40,920-acre zone facing New York’s Long Island – not far from the zone now controlled by Statoil. (Map here; Statoil's zone in gray and PNE's requested zone in green.) 

PNE says it would look to build a 300-400MW project called Excelsior in the New York zone, using turbines of 8-10MW as the reference.

If BOEM decides to move forward with PNE’s application, it will issue a public notice to see whether other developers are also interested in the New York zone – potentially setting up another auction.

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PNE is registered to participate in next week's auction for an offshore wind zone facing North Carolina.

Since the last round of offshore wind auctions were held in the northeastern US, a number of new opportunities have opened up for selling the power – a factor that has historically been lacking in the US offshore wind market, and which has prevented a number of projects from advancing.

Massachusetts now has a binding target of 1.6GW of offshore wind by 2027, while New York has signaled it will procure 2.4GW by 2030 – including the 90MW power-purchase agreement Deepwater Wind recently secured with a utility on Long Island.

Statoil’s winning bid of $42.5m for the New York zone late last year shattered the previous record for a US offshore wind development.

The Bay State and Vineyard zones, won for just $448,000 between them in 2015, may end up holding more than 2GW of offshore wind capacity.

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