A leading developer of offshore wind says states in the US that plan to build many gigawatts of offshore wind capacity will not be able to unless the Bureau of Ocean Energy Management (BOEM) holds more lease auctions soon
Taking New Jersey as an example, EnBW North America president and chief executive Bill White told the IPF Virtual Conference that a dearth of lease areas and projects able to bid into solicitations could mean 2020 could be the last opportunity the state has for a competitive auction.
In the US, the offshore wind development process starts with lease auctions held by BOEM. Leases are awarded to developers so they can develop projects that are then bid into solicitations from states.
Industry leaders have been urging BOEM to line up more lease auctions for offshore wind in 2020 and hold lease auctions steadily after that. But no offshore wind auctions were held in 2019, and only two are on the horizon in the foreseeable future. A long-term pipeline of lease opportunities is essential to provide the basis for new projects to be developed and bid into upcoming solicitations.
Mr White said new lease areas are also essential to drive competition in the offshore wind market in the northeast US, ensuring states get projects that meet their needs and avoid the possibility that ‘a monopoly’ might develop in the region because of the dearth of projects ready to bid in auctions after 2020. Those that are ready are in the hands of one or two leading developers.
Mr White said his concerns rest in part on a strong possibility some projects that could be bid in response to solicitations from New Jersey after 2020 might by then have been successfully bid in response to solicitations from other states, such as New York, which also has ambitious targets for offshore wind.
In 2018, New Jersey held an initial solicitation for 1.1 GW of offshore wind. Equinor, Shell and EDF and Ørsted bid in that solicitation with Ørsted successful with its Ocean Wind project.
In 2020 a further solicitation for 1.2 GW of offshore wind is due to take place, with Ørsted, Shell/EDF and Equinor again expected to be among the bidders. Another solicitation for 1.2 GW is due to take place in 2022.
By that time, Mr White suggested, Ørsted’s Ocean Wind project could be the only one able to bid unless other lease areas are quickly auctioned and companies can bring forward projects they can bid into solicitations from New Jersey, and other states.
Mr White said he is concerned the market in the northeast US will become ‘progressively more constricted,’ with four project areas available to respond to New Jersey’s solicitation in 2020, and potentially only one left able to respond to a solicitation from the state in 2022.
“There is a real likelihood that New Jersey might only get one bidder,” Mr White told the conference.
In 2024, 2026 and 2028, New Jersey wants to hold solicitations of 1.2 GW, 1.4 GW and 1.4 GW respectively, but without addition leases awarded that developers could use for projects, “there will be no bidders left,” Mr White asserted.
“If 2020 were to be New Jersey’s last competitive solicitation, the state would fall approximately 4 GW short of its 7.5 GW goal, and have no bidders in 2024, 2026 and 2028,” he concluded.