BOEM summer auction off Maryland

The US Bureau of Ocean Energy Management this summer expects to hold a competitive commercial wind energy lease auction for two areas in federal waters off the Maryland coast, BOEM Director Tommy Beaudreau tells Recharge.

The auction will be the third along the US Atlantic seaboard after successful lease sales last year involving tracts off Massachusetts-Rhode Island and Virginia.

For Maryland, BOEM in February released a Proposed Sales Notice for the 132.3sq km North Area and 190.1sq km South Area. Each area off Ocean City contains five whole blocks and some partial ones.  The areas are located between 18.5km and 42.5km from shore.

“We’re now working to finalize the Final Sale Notice in May which will schedule the actual auction. We can’t as a regulatory matter schedule the sale sooner than 30 days after it comes out. But I would expect the auction itself to be this summer,” he says.

Beaudreau says that Maryland is a good example of where BOEM has been able to align to the maximum extent possible its leasing process with a state’s offshore wind development goals.

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.

In 2013, Deepwater Wind submitted a winning $3.8m bid for the Massachusetts-Rhode Island acreage and Virginia Electric and Power Company (Dominion) won the Virginia lease with a $1.6m bid.