BOEM moves ahead on new GoM offshore wind lease sale

Three of the new areas are off the coast of Texas, and one is off the coast of Louisiana.

Despite the tepid response to its first Gulf of Mexico offshore wind lease auction, the U.S. Department of the Interior today announced its proposal for a second GoM offshore wind lease sale The proposed lease sale includes four areas offshore Louisiana and Texas, totaling 410,060 acres, which have the potential to power 1.2 million homes.

Three of the new areas are off the coast of Texas, and one is off the coast of Louisiana.

The first GoM offshore wind lease sale, in August last year, produced only one winning bid. RWE Offshore US Gulf, LLC was the winner of the Lake Charles Lease Area, off Louisiana, with a high bid of just $5.6 million, a fraction of the billion-dollar bids for East Coast offshore wind leases in the Atlantic Ocean. There were no bids at all for the two lease areas off Texas.

As we noted then, low bid prices were to be expected, given that Gulf Coast development require investing in floating wind, a still new technology, wind speeds are lower than in the Atlantic and hurricanes are a regional seasonal reality.

The absence of any bids for the sites offshore Texas was seen as attributable to the state’s having no official target for offshore wind production and to the way the Texas electricity market works.

Be that as it may, Interior seems undaunted about the prospects for this second GoM offshore wind lease sale.

“Today’s announcement is another step forward in the Biden-Harris administration’s pursuit of building a clean energy future and permitting 30 gigawatts of offshore wind energy capacity by 2030,” said Secretary of the Interior Deb Haaland. “We are taking action to jumpstart America’s offshore wind industry and using American innovation to deliver reliable, affordable power to homes and businesses, while also addressing the climate crisis.”

“BOEM is proud to play a leading role in the administration’s clean energy efforts,” said BOEM Director Elizabeth Klein. “We look forward to receiving feedback from tribes, other government agencies, ocean users, local communities, and others to minimize any impacts to natural and cultural resources, reduce potential conflicts with ocean uses, and maintain a healthy marine ecosystem.”

GREEN HYDROGEN PRODUCTION?

With today’s announcement, BOEM is seeking feedback on various aspects of the proposed lease areas, including size, orientation, and location of the four lease areas and which areas, if any, should be prioritized for inclusion or exclusion from this lease sale. BOEM is also seeking comment on potential lease revisions to include the production of hydrogen or other energy products using wind turbine generators on the lease.

This raises the interesting thought that producing green hydrogen offshore Texas could be more profitable than producing electricity there.

BOEM is proposing to conduct simultaneous auctions for each of the four lease areas using multiple-factor bidding. The agency says that it will use new auction software for enhanced efficiency, with minor adjustments to auction rules used in previous offshore wind lease auctions. 

The Proposed Sale Notice for the new GoM offshore wind lease sale will publish in the Federal Register March 21, 2024 (read the prepublication version), initiating a 60-day public comment period ending on May 20, 2024. If BOEM decides to proceed with the auction, the next step would be publication of a Final Sale Notice.

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