Published on August 1st, 2013 | by Silvio Marcacci2
Deepwater Wind Wins America’s First Offshore Wind Competitive Lease Sale
America’s nascent offshore wind industry cleared a major hurdle yesterday, successfully holding the first-ever competitive lease sale for offshore wind energy development.
Deepwater Wind was declared the provisional winner in the Interior Department’s auction of two leases, totaling 164,750 acres roughly 9 miles offshore Rhode Island and Massachusetts, with the potential for 3,395 megawatts (MW) of wind power.
Deepwater’s $3.8 million bid wins it the right to build the Deepwater Wind Energy Center (DWEC), a 1,000MW utility-scale wind farm with 200 turbines and a regional transmission system linking to New York State and southeastern New England. Construction is expected to start as early as 2017, and power production could begin as early as 2018.
Largest Offshore Wind Farm Ever Proposed In US
Deepwater estimates the project will produce enough electricity to power 350,000 homes and displace over 1.7 million tons of carbon annually. “This is an enormous step forward for the industry and the best site for offshore wind in the United States, bar none,” said Jeffrey Grybowski, Deepwater CEO. “Our Deepwater Wind Energy Center project will produce clean power and jobs for an entire region.”
DWEC now becomes the largest offshore wind farm ever proposed for the US, and will be located in deeper water farther from shore than any other project. Most of the turbines will be located 20-25 miles from land, making them virtually invisible from shore, hopefully avoiding nagging landowner concerns that have stymied the Cape Wind project.
The company will pay the federal government $500,000 annually starting this year until a wind farm is operational, and from that point on, will pay an annual royalty fee based on the value of electricity it generates. Total project costs may hit $5 billion, including $1 billion for transmission lines.
A Rising Tide For Offshore Wind In America?
Yesterday’s competitive auction could be the turning point for offshore wind in America. A second offshore wind lease sale for 112,800 acres near Virginia Beach, Virginia is scheduled for September 4th, and Interior Secretary Sally Jewell previously indicated the success of yesterday’s auction would help decide how many additional offshore lease auctions are held.
“When you think about the enormous energy potential that Atlantic wind holds, this is a major milestone for our nation,” said Secretary Jewell. “Offshore wind is an exciting new frontier that will help keep America competitive, and expand domestic energy production, all without increasing carbon pollution.”
Indeed, a recent study estimated that harnessing even a realistic fraction of offshore wind’s 52 gigawatt (GW) potential could power 14 million homes, create 300,000 new jobs, and generate $200 billion in new economic activity along the Atlantic coast. Offshore wind is expected to become a $172 billion industry by 2020, and if the US doesn’t keep pace, it risks losing market share to Europe and Asia-Pacific nations.
Fortunately, yesterday’s auction and the DWEC plans could herald a new model for building offshore wind in America. The federal government coordinated the site selection process as part of its “Smart from the Start” approach designed to help stimulate 10GW of new renewable energy production on public lands and waters by 2020.
Deepwater Wind also used a collaborative approach to win the auction, partnering with its home state of Rhode Island in the bidding process to develop a Joint Development Agreement, smoothing future regulatory approval. The company will also work with the multiple environmental organizations to minimize wildlife impacts from siting and operation.
Additional auctions are now expected for lease areas offshore Massachusetts, Maryland, and New Jersey in 2013 and 2014. So while it may be years before wind turbines are turning in the Atlantic Ocean, yesterday’s auction may mean the tide has finally turned for offshore wind in America.