‘Proceed with caution': Key takeaways from California's first offshore wind energy auction
The federal government's recent lease sale drew lower bid prices than similar East Coast sales, which experts say reflects the uncertainties the offshore wind industry faces in California, but the…
Samantha Woodworth, Wood Mackenzie senior research analyst, stated that "[This] certainly wasn't the super competitive auction I was expecting," given the excitement surrounding the establishment of a California offshore Wind Industry, ambitious offshore wind planning goals adopted in California, and the drive to get an American floating offshore wind sector established. Five companies submitted winning bids totaling $757.1 million for five lease areas covering more than 370,000 acres, both off the coasts in central and northern California. BOEM estimates that the areas could produce approximately 4.6 GW of off-shore wind energy. "Lower bid prices allow developers to make more money than they can," Woodworth said. Woodworth stated that it is important for the industry to keep the bid prices low because it lowers their project costs and increases the likelihood of the projects being approved by the authorities, the utilities commissions, and the state. Industry advocates believe that California must now create a plan to permit offshore wind projects, develop ports to support the industry, and figure out how to transmit it to shore. The sale of California leases by BOEM is a significant step towards the Biden administration’s goal to install 30 GW offshore wind capacity in the U.S. by 2030 and 15 GW floating offshore wind by 2035. According to a statement, the bureau. Equinor Wind US President Molly Morris stated that the U.S. West Coast is "one of the most desirable growth regions for floating offshore wind in the world because it has favorable wind conditions and is close to markets that require reliable, clean energy." Equinor secured a lease of approximately 2 GW in Morro Bay, an area off the central California coast. The lease covers more than 80 acres. California Wind Energy Association Executive Director
According to Sam Salustro (Vice President of Strategic Communications at The Business Network for Offshore Wind), the results of the lease sales showed some encouraging trends and surprising outcomes. Salustro said that it was surprising that only seven bidders participated in the auction, while 43 were pre-qualified. "I find that surprising, because there are many floating [offshore wind] developers worldwide and we may have believed that... some of them might have gotten involved. California's offshore-wind industry is still uncertain about the final offtake agreements. The industry faces another uncertainty as California attempts to establish a new technology called floating offshore wind. Because the East Coast is in shallower waters, projects can use fixed-bottom turbines. California's water depths are deeper than those in California, so wind turbines must be floating and connected to the ocean bottom using cables. "There is still much to do to make the California industry a success... it's not surprising that the sale of leases is slightly lower than New York." Rader said that lower bid prices can have an ancillary advantage. Rader stated that the East Coast's astronomical bid prices run the risk to push up power purchase prices. She stated that it was good that bid prices were lower because it will have a less significant impact on power purchase prices. As California transitions to a decarbonized grid, offshore wind can be a crucial part of its energy mix. California has heavily relied on solar power to generate renewable energy. This can be done on rooftops or in large-scale solar arrays. California regulators set offshore wind planning goals of 2 GW to 5, GW by the end the decade and 25 GW by 2045. Offshore Wind California Executive Director
He said, "And we need additional calling areas." Despite the fact that the auction was so successful, BOEM estimates that the combined capacity of all the areas is 4.6 GW. Solomon said that developers should now begin working with communities affected by offshore wind energy development in order to determine what type of community benefits they can offer. "A major concern in our opinion is whether we will get any economic benefits from it." Is this going to be built in California? Rader stated. Rader said, "We are working hard to ensure that we build at least some floating platforms in California." De Lamare stated that regulators must promote environmentally responsible offshore wind development. She suggested that leaseholders be asked to make commitments to minimize environmental impacts, and to conduct additional research to fill in data gaps.