US Wind top Maryland offshore bid

Looking out from Ocean City, Maryland.

Looking out from Ocean City.

Developer US Wind, a unit of Italy's Renexia, submitted a $8.7m provisional winning bid in a competitive auction Tuesday to lease two parcels in federal waters off Maryland's Atlantic coast for commercial wind development.

US Wind outlasted Green Sail Energy through 19 bid rounds before the Bureau of Ocean Energy Management (BOEM), which conducted the auction, declared it the winner.

SCS Maryland Energy also participated in earlier bid rounds.

US Wind’s bid easily exceeded those that won two prior auctions for offshore lease areas auctioned by BOEM.  In July last year, Deepwater Wind submitted a $3.83m bid for two blocks in an area off Massachusetts and Rhode Island, while a Dominion subsidiary last September made a $1.6m high bid for an area off Virginia’s coast.

The Maryland auction comprised a 132.5sq km North Lease Area and a 190sq km South Lease Area. They are located between 18.5km and 42.5km from Ocean City, Maryland, and have potential to support between 850MW and 1.45GW of commercial wind generation, according to the National Renewable Energy Laboratory.

The high bids through 18 of the bidding rounds were $5.341m for the North Lease Area (two bidders) and $5.359m for the south Lease Area.The winning bid in the 19th and final round was lower than the sum of these two because of the rules of the BOEM auction process governing the eligibility of bids at the end of the process – rules that left US Wind the last contender standing.

“Today’s results are a major achievement and reflect industry confidence as we strengthen our nation’s foothold in this new energy frontier,” says Interior Secretary Sally Jewell. BOEM, which oversees wind development in federal waters, is part of the US Interior Department.

BOEM had pre-qualified 13 other companies for today's auction:

Apex Offshore Maryland; Bluewater Wind Maryland; Convalt Energy; Dominion; EDF Renewable Energy; Energy Management, Inc.; Fishermen’s Energy; Iberdrola Renewables; Maryland Offshore Wind; Orisol Energy US; RES America Developments; Sea Breeze Energy and Seawind Renewable Energy Corporation.

The US Attorney General, in consultation with the Federal Trade Commission, will have 30 days in which to complete an antitrust review of the auction.

BOEM will then send unsigned copies of the lease form to US Wind, who will have 10 days to sign and return it, file required financial assurance and pay the balance of the winning bid. 

Each area lease will have a preliminary term of one year, during which US Wind will submit a Site Assessment Plan (SAP) to BOEM for approval.

A SAP describes the activities (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 area. 

If BOEM approves a SAP, US Wind will then have up to 4½ years in which to submit a Construction and Operations Plan (COP) to BOEM for approval. This plan provides detailed information for the construction and operation of a wind energy project on the lease.

After BOEM receives a COP from a lessee, BOEM will conduct an environmental review of that proposed project. Public input will be an important part of BOEM’s review process.

If BOEM approves the COP, US Wind will have an operations term of 25 years for the lease areas.

Earlier this year, Maryland Governor Martin O’Malley signed a bill into law that provides a 20-year taxpayer subsidy for development of a 210MW offshore wind farm.

Under the law, household electric rates will increase up to an estimated $1.50 per month with most businesses paying a 1.5% monthly surcharge on their bills. The rate hikes would not take effect until after the wind farm is operational, which O’Malley’s administration hopes will be in 2018.

Maryland already requires that 20% of its electricity come from renewable sources by 2022. The law creates a carve-out within the RPS for offshore wind.

The law also creates offshore wind renewable energy credits, or ORECs, that will be awarded to offshore wind farm operators on a megawatt-hour production basis.  It obligates the state’s investor-owned electric utilities to purchase both the project’s electricity and ORECs, which they can use to help meet RPS compliance.

Project investors would need to show that any wind farm would generate a net economic benefit for Maryland.

The state Public Service Commission will launch and supervise the program.

 

User

Become a Recharge subscriber!

Or try our free trial.

Order Subscription

Already a member?

Login


Recharge Monthly Magazine