The US government banged the gavel in a second offshore wind leasing round this year with separate winners for two blocks in the Carolina Long Bay wind energy area (WEA) straddling the federal boundary waters between North and South Carolina.
A unit of Charlotte-based Duke Energy and French oil supermajor TotalEnergies emerged as winners in a crowded field of bidders.
Duke Energy Renewables Wind paid $155m for lease 0546, marking the parent company's entry into the fast-growing US offshore wind sector. Aside from Duke, other US electric utilities with east coast offshore acreage are Dominion, Eversource Energy, and PSEG.
TotalEnergies Renewables USA paid $160m for lease 0545, despite both zones coming in at around 55,000 acres. Each zone has 650MW of potential generation capacity, according to the National Renewable Energy Laboratory (NREL).
TotalEnergies won acreage in the New York Bight, paying $795m for lease 0538 with some 3GW of potential capacity.
NREL uses a figure of 3MW per km2, while the industry uses 5MW/km2, giving each lease area some 1GW of potential capacity.
This is the first auction following the wildly successful New York Bight in February and continues momentum towards the Biden administration’s goal of 30GW of operating plant by 2030. BOEM anticipates holding another auction off California before the end of the year, followed by the Gulf of Mexico in early 2023.
“The Biden-Harris administration is moving forward at the pace and scale required to help achieve the president’s goals to make offshore wind energy a reality for the United States,” said Interior secretary Deb Haaland. “Today’s lease sale is further proof that there is strong industry interest and that America’s clean energy transition is here.”
This auction marks the southernmost reaches of the US offshore wind sector, which until now has been concentrated in the mid-Atlantic and New England states, signaling growing demand beyond the industry's core regions.
Prices were much lower than in the New York Bight, however, reflecting the lack of clear pathway to offtake, in contrast to New York and New Jersey, which have both enormous load centres and legal mandates for offshore wind capacity which drove lease prices to $8,830 per acre.
TotalEnergies will pay some $2,912/acre for its 54,937-acre lease, while Duke got a relative bargain at $2,810/acre for its 55,154-acre area.
Katharine Kollins, president of Southeastern Wind Coalition, said the pricing fell within the range that both demonstrates the strong demand for offshore wind acreage while not raising red-flags over ratepayer impacts.
“As a state, you’re not looking for the highest bidder – the only one who is looking for the highest bidder is the US Treasury,” she told Recharge. “What you're really looking for is a bidder that is genuinely interested in bringing clean energy to your state. I think that both Duke and TotalEnergies are going to fit the bill.”
The auction included several innovations aimed at increasing investment into local supply chain and workforce development, and some 20% of the bidding price is comprised of pledges for such investment.
“For the first time, the federal government used an auction system designed to spark investment directly into US manufacturers, small businesses, shipbuilders and new workforce training, accelerating development of the already-emerging domestic supply chain,” said Liz Burdock, of the Business Network for Offshore Wind, an advocacy group.
“Today’s lease sale continues the momentum toward a sustainable US offshore wind market, opening the door further to North Carolina’s rich manufacturing sector, and unlocking the full potential of the US supply chain that will create tens of thousands of jobs in manufacturing centres and coastal towns alike.”
North Carolina has the largest manufacturing sector on the US east coast and already several firms are gearing up for the offshore wind supply chain.
National Ocean Industries Association President Erik Milito, said the auction points to the “maturation of the market and an optimistic outlook for offshore wind in areas beyond our Northeastern states. A stronger supply chain, with new jobs and investments, will stretch through the Carolinas and communities throughout our nation.”
While bolstered by the successful outcome, the industry faces a ten-year moratorium on offshore energy leasing initiated by executive order of former President Trump starting on 1 July.
“This lease sale shows the strong demand for clean energy, and it should also be a sign to Congress to repeal the 10-year moratorium on offshore wind leasing off the coasts of North Carolina, South Carolina, Georgia, and Florida,” said Heather Zichal, CEO of the American Clean Power Association.
“Creating a stable policy platform for offshore wind development and facilitating the first wave of significant projects will provide certainty for the industry, strengthen the workforce, and bolster domestic supply chains up and down the coasts and across the country.”