Massachusetts offshore lease auction set for December

The federal US government will hold its highly anticipated lease auction for new offshore wind zones off Massachusetts on 13 December, with 19 development companies qualified to bid – from industry stalwarts like Deepwater Wind to oil & gas giants like Enbridge and Equinor to major onshore developers like E.ON.

Several important changes have been made since the Interior Department's Bureau of Ocean Energy Management (BOEM) first proposed the Massachusetts auction earlier this year.

First, what were once two zones have now been carved into three – known as lease areas 0520, 0521 and 0522. That's important because it means there will be more competition from more developers for off-take deals in New England.

Second, the operating term of each less has been extended to 33 years, from 25 years previously.

The zones total nearly 390,000 acres (1,560 sq km) and could hold 4.1GW of future offshore wind capacity, BOEM says. (Click here for a map of the zones.)

The three zones that are up for grabs in December sit alongside a quartet of others south of Massachusetts and Rhode Island that were won in previous auctions in 2013 and 2015, now controlled by Deepwater Wind, Orsted, and Vineyard Wind.

In a striking reminder of how much the US offshore wind market has changed over the past few years, Orsted and Vineyard Wind's zones were won for a total of just $448,000 in the 2015 auction. By late 2016, Equinor (then Statoil) paid more than $40m for a zone off New York.

Two other zones off Massachusetts put to auction in 2015 did not receive any bids at the time. Those same two unclaimed zones are the ones that have now been split into three, and will be auctioned off in December.

Among the 19 qualified bidders for December's auction are a number of big onshore renewables developers that do not currently control an offshore zone in the US – among them EDPR and Germany’s E.ON (through its EC&R Development unit), the nation's fourth and fifth largest owners of onshore wind capacity, respectively.

Avangrid, the US utility controlled by Iberdrola, is qualified as a bidder both through its Avangrid Renewables unit and through Vineyard Wind, which it jointly controls with Copenhagen Infrastructure Partners.

In addition to Vineyard's qualification, Copenhagen Infrastructure Partners (CIP) may also bid through its own vehicle known as CI III Blue Cloud Wind Energy. Earlier this year, CIP closed a new investment fund, known as CI III, and last month it opened an office in New York City.

Orsted, the world's leading offshore wind developer, does not appear to have registered to participate, though Deepwater Wind – which Orsted is in the process of acquiring – is a qualified bidder.

Several Canadian companies are qualified to bid – including Northland Power, a significant player in European offshore wind – as well as German players like Innogy, WPD and PNE.

There are also a number of little-known developers on the list of qualified bidders, such as Camellia Wind Energy, East Wind LLC and Northeast Wind Energy. It's unlikely that all of the developers who have qualified to bid will ultimately do so.

(See BOEM's Final Sale Notice, and the full list of qualified bidders, here.)

Separately, BOEM announced it will begin preparing an Environmental Impact Statement for Deepwater’s South Fork project off New York, which includes reviewing the Construction and Operations Plan.

Deepwater chief executive Jeff Grybowski called the announcement a "major step forward" for South Fork, and said the 90MW project is on track to obtain all its permits by 2021 and finish construction in 2022.

As part of a flurry of offshore wind-related announcements, BOEM also said it will publish a Call for Information and Nominations for potential offshore wind projects off California, formally moving that state another step closer to its first lease auction.

After Massachusetts, the next US offshore wind lease auction is slated for zones off New York in late 2019 or 2020. The industry hopes a California auction would follow quickly after that.