BOEM Announces Third US Offshore Wind Competitive Lease Auction

After successful lease auctions for offshore wind development in New England and Virginia, the Bureau of Ocean Energy Management (BOEM) is setting sail for a new location in the race to develop America’s wind potential – Maryland.

BOEM officially announced the offshore wind lease auction today in the Federal Register. As in previous lease auctions, prospective developers now have a 60-day public comment period in which to signal their interest and submit proposals for review.

If all goes according to plan, America could hold its third lease auction as soon as this Spring, and continue its full-speed effort to join the international race to develop offshore wind resources.

Will The Third Time Be A Charm?

The “Maryland Wind Energy Area” spans roughly 80,000 acres between 10-30 miles due east from Ocean City off the northern Maryland coastline. The entire area will be auctioned off as two separate leases, with 32,737 acres in the North Lease Area and 46,970 acres in the South Lease Area, representing between 850-1,450 megawatts of potential wind power capacity.

Maryland offshore wind north and south lease areas chart via BOEM

If past is prologue, the Maryland auction will turn a tidy profit. Deepwater Wind was the winning bidder of BOEM’s first competitive offshore wind lease auction in August, paying $3.8 million for the rights to develop what could be America’s largest offshore wind farm, across 164,750 acres off the Massachusetts and Rhode Island coasts.

BOEM also successfully auctioned a smaller parcel of 112,800 acres off the Virginia coast to Dominion Virginia Power in September. While the auction netted $1.6 million, local environmentalists and other offshore wind developers have criticized Dominion’s intent to actually develop the lease, hinting it may only want to prevent other developers from installing turbines.

As with the two previous lease auctions, the Maryland area will go through the Interior Department’s “Smart from the Start” approach and include environmentalists, business interests, and the military to ensure the final project meets as few siting challenges as possible.

Maryland’s Role In US Offshore Wind

While additional BOEM offshore wind auctions were expected in 2014, the fact that Maryland was the third area announced could be interpreted as a response to the state’s efforts to develop offshore wind on its own.

Earlier this year, Maryland passed a carve out for offshore wind in its renewable portfolio standard, mandating a certain percentage of the state’s electrical demand is met by offshore wind starting in 2017. Initial accounts estimated the move could create roughly 200MW of new offshore wind capacity, but it’s so far unclear how the BOEM auction will affect that outlook.

Can America Harness Offshore Wind’s Potential?

If the full impact of offshore wind in Maryland is still unknown, the full potential for America couldn’t be clearer. The US Department of Energy and Department of Interior published a national offshore wind strategy in 2011 that estimated the generating capacity of potential offshore wind turbine sites in less than 100 feet of water equaled the entire generation capacity of America’s current electric system.

In addition, a 2012 report from the National Wildlife Foundation estimated harnessing even a realistic fraction of America’s offshore wind potential could power 14 million homes, create over 300,000 new green jobs, and $200 billion in new economic activity.

BOEM’s auction process is a long-overdue step toward getting America into the race to capitalize upon the estimated €130 billion global market for offshore wind by 2020, but coming the same week as news construction on Cape Wind has finally begun, it could signal a new phase in the domestic industry’s maturation.