Federal wind lease auction starts next week
Starting next week, nine companies can bid on two federal lease areas offshore Rhode Island and Massachusetts in order to develop a commercial offshore wind farm. One of the eligible companies is Deepwater Wind, which has a separate proposal to build a wind farm off the coast of Block Island.
The monetary bidding for the lease areas will take place electronically next week, on Wednesday, July 31, according to a final sale notice issued by the Bureau of Ocean Energy Management (BOEM), which is leasing the area.
The July 5 notice states, “On July 31, 2013, BOEM, through its contractor, will hold the monetary stage of the auction. The auction will start at 10:30 a.m. The auction will proceed electronically according to a schedule to be distributed by the BOEM Auction Manager at the time of the auction. BOEM anticipates that the auction will continue on consecutive business days, as necessary.”
Provisional winners will be announced after the auction is over, said the final sale notice. “If there are adequate bids, two leases will be issued pursuant to this lease sale,” it said. In total, both lease areas encompass 164,750 acres. The south area is 67,252 acres, and the north area is 97,498 acres.
There is a minimum bid price for both these areas. The notice said, “the minimum bid for the South Lease Area will be $1 per acre, or $67,252. The minimum bid for the North Lease Area will be $2 per acre, or $194,996.”
BOEM said that the north lease area was more competitive and cost effective for commercial development, which is why its cost is higher.
BOEM also said that it will look at two things during the bid process “(1) a cash bid, and (2) a non-monetary credit, i.e. if a bidder holds a Power Purchase Agreement (PPA) or a Joint Development Agreement (JDA).”
The auction will continue in a series of bidding rounds. After each round, BOEM will raise the asking price incrementally. The lease notice said that the early bidding rounds, the increments will range from 20 to 50 percent. The auction continues until there is only one bidder left for each lease area.
The final sale notice also says its auction format “considers a non-monetary factor along with ascending bidding over multiple rounds, sharing certain useful information with bidders at the end of each auction round, such as the number of live bids associated with each Lease Area (LA).”
A credit of up to 25 percent for one lease area is given to bidders on each round if they hold a PPA or JDA. Deepwater’s CEO Jeff Grybowski has repeatedly said in the past that he expects Deepwater to win the auction.
The final sale notice said that “BOEM has determined that the following companies are legally, technically and financially qualified” to participate in the bidding: Deepwater Wind; EDF Renewable Development, Inc.; Energy Management, Inc.; Fisherman’s Energy, LLC; Iberdrola Renewables, Inc.; Neptune Wind LLC; Sea Breeze Energy LLC; US Mainstream Renewable Power (Offshore) Inc.; and US Wind Inc.