US says to complete offshore wind auctions on schedule next year - Reuters.com
US says to complete offshore wind auctions on schedule next year | Reuters
US says to complete offshore wind auctions on schedule next year
[1/3]U.S. President Joe Biden holds up a wind turbine size comparison chart while attending a meeting with governors, labor leaders, and private companies launching the Federal-State Offshore Wind Implementation Partnership, at the White House in Washington, U.S., June 23, 2022. REUTERS/Kevin Acquire Licensing Rights
Sept 25 (Reuters) - The Biden administration will complete its ambitious offshore wind leasing schedule on time next year, the Interior Department told Reuters, despite delays to preparatory work for the auctions and sagging demand from the industry.
President Joe Biden’s White House is depending on rapid adoption of offshore wind to help decarbonize the U.S. power sector to fight climate change, with a goal to install 30 gigawatts by the end of this decade.
It unveiled a plan to do so in October 2021 that included offering lease sales in seven U.S. regions before 2025, and it has so far held auctions in four of them – off New York and New Jersey, the Carolinas, California, and in the Gulf of Mexico.
In an emailed statement, a spokesperson for Interior's Bureau of Ocean Energy Management said the agency was planning to hold offshore wind lease sales for the remaining three – the Central Atlantic, the Pacific coast of Oregon and the Gulf of Maine - in 2024.
Observers had been concerned about the sales due in part to delayed preparations.
The Central Atlantic sale, for example, was expected to take place this year. But the 1.7-million-acre area has yet to be whittled down and divided into proposed lease areas, a process that takes several months.
In the Gulf of Maine, Interior has also yet to carve up a 10 million-acre area it identified earlier this year into smaller "wind energy areas," which must then be sliced up again into smaller lease areas – a process that can drag on due to multiple rounds of public comment.
If the administration fails to get this work done and hold these auctions by the end of the third quarter of 2024, it could run into additional hurdles, because federal law requires offshore wind lease auctions to happen within 12-months of the most recent oil and gas lease sale.
The Interior Department is holding an oil and gas lease sale in the Gulf of Mexico this Wednesday, the last in its five-year plan. A new five-year plan for oil and gas leasing will be released later this month, and it is unclear if it will include any sales in 2024.
U.S. Senator Joe Manchin, a Democrat from conservative West Virginia, tethered oil and offshore wind lease sales in last year’s Inflation Reduction Act to encourage Biden to continue to hold drilling auctions.
BOEM spokesperson Tracey Moriarty said the agency was committed to finalizing the five-year oil and gas plan and achieving its goals for offshore wind.
"In carrying out these activities, BOEM will act in compliance with the Inflation Reduction Act," Moriarty said.
Demand for offshore wind leases has also flagged in recent months as cost inflation darkens the industry’s outlook.
Huge wind developer Orsted last month said it may see U.S. impairments of $2.3 billion due to industry headwinds, and a lease sale in the Gulf of Mexico in August yielded just one winning bid of $5.6 million.
Reporting by Nichola Groom and Jarrett Renshaw Editing by Nick Zieminski
Our Standards: The Thomson Reuters Trust Principles.
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Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.