The Bureau of Ocean Energy Management put up for auction four lease areas near Massachusetts totaling 742,000 acres and with the potential to support 4 gigawatts of commercial wind generation.
But just two companies bid on two of the areas, with RES America Developments Inc. provisionally winning the lease on a 187,523-acre area for $281,285 and OffshoreMW LLC winning the lease on a 166,886-acre area for $166,886.
Speaking on a conference call announcing the auction results, BOEM Director Abby Ross Hopper said the two areas developers bid on were located closer to shore than the other areas up for auction.
Hopper rejected the idea that the low bids in today’s auction were in reaction to recent troubles the Nantucket Sound Cape Wind project has had related to its power purchase agreements, instead attributing the auction results to the acreage’s depth.
The agency does not yet know what it will do with the lease areas that did not receive bids but will consult with Massachusetts.
“I am very encouraged by the fact that two experienced wind developers decided to bid and won leases,” Hopper said.
Twelve companies were eligible to compete in the auction, including Deepwater Wind LLC, which has already leased another area off Massachusetts and Rhode Island, and U.S. Wind Inc., which won the auction of two lease areas near Ocean City, Md., in August 2014 (E&ENews PM, Aug. 19, 2014).
Hopper said BOEM set the initial asking price for the Massachusetts area lower than other auctions.
“We know developing an offshore wind facility here would be more expensive,” she said.
She also said previous wind development auctions had been held near states that had created power purchase and renewable energy credit programs in advance of the auctions.
“That impacts that value a company places on it,” she said.
Indeed, the three previous offshore wind auctions saw winning bids in the millions of dollars. The August auction of two leases near Maryland, which has a renewable energy credit program, raked in $8.7 million.
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