Offshore Wind Farm Lease Areas Auction For $8.7M

Offshore Wind Farm Lease Areas Auction For $8.7M

OCEAN CITY — The future development of a vast wind energy farm off the coast of Ocean City cleared another significant hurdle this week with the successful auction of 80,000 acres off the resort’s coast to a Texas-based company for over $8.7 million.

On Tuesday, the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) opened the online auction for the Maryland Wind Energy Area (WEA), two adjacent lease areas totaling 80,000 acres off the coast of Ocean City for the development of a future offshore wind energy farm. The Maryland WEA covers roughly 94 square nautical miles with its western edge roughly 10 miles off the coast of Ocean City and extending about 30 miles out.

The concurrent bidding for the northern lease area and the southern lease area included 19 rounds and lasted most of the day on Tuesday as the selling price kept creeping up. When the dust settled, U.S. Wind Inc., a Texas-based company with ties to a successful offshore wind developer in Italy, was the successful bidder on both lease areas with a combined investment of around $8.7 million.

U.S. Wind’s successful bid on Maryland’s combined WEA is considered provisional at this point. The Attorney General, in consultation with the Federal Trade Commission (FTC), will now have 30 days to complete an antitrust review of the auction process. BOEM will then send unsigned copies of the lease forms to U.S. Wind, which will have 10 days to sign and return the leases, file the required financial assurance and pay the balance of the winning bids.

Each lease will have a preliminary term of one year, during which U.S. Wind will submit a site assessment plan to BOEM. The site assessment plan will describe the activities the company plans to perform for the assessment of wind resources and ocean conditions, such as the installation of meteorological towers and buoys, for example.

The site assessment plan is a necessary first step in U.S. Wind’s potential development of an offshore wind farm off the coast of the resort, a process that will likely take several years. If the site assessment plan is approved by BOEM, U.S. Wind will then have four-and-a-half years to submit a Construction and Operations Plan (COP), which will provide detailed information about the construction and operation of a wind farm in the leased areas off Maryland’s coast.

After BOEM receives the COP from U.S. Wind, it will begin its own environmental assessment of the plan and collect public input on the proposal from stakeholders. Public input is expected to be a significant part of the approval process. The Maryland Offshore Wind Act of 2013 approved by the General Assembly two years ago described a wind farm off the coast of Ocean City consisting of as many as 40 tall turbines with the potential to support between 850 and 1,450 megawatts, or enough energy to supply 300,000 homes.

Early in the process, concerns were raised in the resort area about the visibility of the tall turbines cranking away off the coast of Ocean City. However, supporters have asserted even the turbines as close as 10 miles off the coast would appear to be the size of a thumbnail and only on the clearest of days.

With the successful auction of the Maryland WEA on Tuesday, state officials praised the project for its potential to diversify the state’s renewable energy portfolio while creating jobs and providing an economic shot in the arm.

“We need a jobs agenda to match our climate challenge,” said Maryland Governor Martin O’Malley following the auction. “Expanding renewable energy, like we’re doing here, will bring Maryland’s vision for clean energy one step closer to reality and clearly set our state apart on the country’s renewable energy landscape.”

Department of the Interior Secretary Sally Jewell said the successful auction of Maryland’s WEA continues the momentum of similar lease areas along the east coast.

“Today’s results are a major achievement and reflect industry confidence as we strengthen our nation’s foothold in this new energy frontier,” said Jewell. “I want to thank Governor Martin O’Malley, his team and members of BOEM’s Maryland Intergovernmental Renewable Energy Task Force for all of their hard work and leadership leading up to today’s successful auction. The collaboration and thoughtful planning that went into this lease sale will serve as a model as we continue up and down the coast in our effort to ensure wind energy is developed in the right way and in the right places.”

Maryland Energy Administration Director Abigail Hopper said this week the state now has the opportunity to be out in front of the nation’s efforts to develop offshore wind energy.

“This is an exhilarating time for the state of Maryland as we are making significant progress in our long term goals to make renewable energy a major contributor to the state’s portfolio,” said Hopper. “Today, we are charging ahead to develop the offshore wind sector in the state. Maryland businesses and stakeholders can begin planning for real and impactful projects.”