First Day of California Offshore Wind Lease Auction Draws Strong Bids
Bidding commenced this morning, December 6, for the U.S. first offshore wind energy leases on the Pacific Coast. The Bureau of Ocean Energy Management is overseeing the online auction, reporting that it is receiving strong bidding. After 20 rounds, the auction was recessed and is due to resume tomorrow, December 7, at 10 a.m. eastern time.
Being offered are a total of five leases, two off Northern California and three off Central California. The Humboldt area is located off the coast of Northern California near Eureka and consists of two areas, one over 63,000 acres and the other over 69,000 acres. The Morro Bay area in Southern California consists of three leases, each of which is over 80,000 acres. The Department of Interior forecasts that the five leases could yield power for 1.5 million homes.
The U.S. predicted that there would be strong interest in the leases. Before today’s auction began, BOEM reported that a total of 43 organizational had been qualified to participate as bidders. The list includes companies developing U.S. East Coast wind farms, including Avangrid, Equinor, and Orsted, as well as smaller developers from California.
Bidding began with an opening round with individual bids for each of the leases between approximately $6 and $8 million. The opening round totaled approximately $37 million. There were between one and three bidders for each of the prosperities in each round. Bidding was recessed after a round at 5:20 p.m. eastern time with the total having risen to over $402 million. Three of the leases are approaching the figure of $1 million per acre while one in each of the areas is currently around $1.2 million per acre.
The California auctions are seen as an important test for the offshore wind industry. Unlike the East Coast leases which have been for projects closer to shore with shallower positions, the California properties are at greater depth. It is anticipated that they would be among the first large commercial wind farms to deploy floating wind technologies.
Bidding resumes Wednesday morning with BOEM reporting it expects it could be completed before the end of day, but that if interest remains strong it could be continued. The provisional winners for each of the lease areas will be announced shortly after the auction ends.