In January, the U.S. Interior Department auctioned off two 25-year leases to build wind farms off the coast of Massachusetts. The leases went to the only two bidders to attend the auction, and for a fraction of what the agency received from previous sales, says a Bloomberg report.
The Bureau of Ocean Energy Management (BOEM) reports that RES America Inc. bid $281,285 to lease access to 187,523 acres, and Offshore MW LLC bid $166,886 to lease 166,886 acres. The leases amount to just $1.50 and $1 per acre, respectively.
Speaking on a conference call with Bloomberg, BOEM director Abigail Ross Hopper said that deep water off the coast of Massachusetts will likely drive up development costs for wind turbines, a fact that figured into the lower auction prices.
“We knew that developing an offshore wind facility in these areas is going to be more expensive,” Hopper told Bloomberg. “As a result of that, we set the minimum price for the bids lower than for the other states. We’re happy with the results of this auction.”
In November, the Interior Department said it intended to auction 742,000 acres in four zones off Massachusetts, and that a dozen companies were qualified to bid. Only two of these companies actually participated in this most recent auction, however, with two other leases receiving no bids at all.
Currently the U.S. has no utility-scale offshore wind installations and is seeking to spur development in the industry. According to data compiled by Bloomberg New Energy Finance, energy from offshore turbines costs about twice as much to produce as power from coal, a fact that is hindering growth.
The U.S. previously awarded seven leases—two through non-competitive bids—for projects in the Atlantic Ocean, including Cape Wind in Nantucket Sound. More than $14 million was raised from five competitive sales for more than 357,000 acres off Maryland, Virginia, and New England.