The not so wild west? Aegir Insights analyses California offshore wind lease sale

December 20, 2022
 | 
3 min read
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Earlier this month, the Bureau of Ocean Energy Management closed the first offshore wind auction on the west coast of USA, the first auction ever for deep-water floating wind leases.

After 31 bidding rounds, three leases were awarded in Morro Bay in Central California and two in Humboldt in the north, with the leases in Humboldt fetching the highest prices.

Humboldt offshore wind leases got highest bids

That the leases in the Humboldt area got the highest prices could come as a surprise to many due to the unusually extensive grid updates necessary to connect commercial-scale wind farms. The long lead-time for building out the grid makes the Humboldt leases a waiting game, and developers must be in it for the long term.

But the bidding data, released by BOEM on the 16th December, shows that this has not been a deterrent to bidders. Four out of the seven bidders focused mainly on the Humboldt area (RWE, Invenergy, Avangrid, CIP) – and the highest price in the auction was for the Humboldt lease area OCS-P 0563, which has the best wind resources and more shallow water than the Morro Bay leases.

Humboldt OCS-P 0562 was won by Copenhagen Infrastructure Partner (CIP) after competing with Avangrid for most of the auction rounds and RWE in some of the last rounds of the auction.

The bidding competition between the three companies is shown in the chart to the right.

California auction showed appetite for floating wind

With only seven bidders for five areas, lease prices ended up lower than in BOEM’s earlier 2022-auctions.

The lower level of competition compared to for instance the New York Bight auction reflects the higher technology risks due to the nature of the leases requiring development of deep-water floating wind concepts, risks due to grid constraints in the north and a lack of suitable ports close to the Morro Bay areas in Central California, and the lack of firm state procurement targets and processes.

All in all however, the auction showed that the offshore wind industry is ready to compete for deep-water floating wind areas, even when there are added political and infrastructural risks.

The second race chart shows the bidding activity on lease OCS-A 0565, one of the deepest leases with water depths ranging from 957-1348 metres:

Despite the depth, this lease saw the most bidding activity of all, which indicates industry appetite for deep floating acreage.

Aegir Insights' new intelligence product: Auction insights

Would you like to get an overview of round-by-round auction results as well as comparisons with earlier auctions and forecast LCoE levels for each lease area?

Aegir Insights just released key insights into BOEM’s California auction to our subscribers. The publication is the first edition of our new intelligence product, Market Insights.

Market Insights will be published to cover key events and developments in the offshore wind industry in a timely manner.

They will go deeper than standard news articles to provide substantial understanding of the event through context and data-driven analyses, while still remaining short and quick to read.

Please reach out to to learn more about Aegir Insights’ intelligence service or read more on our Products page.

Illustration made with Flourish.

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Aegir Insights provides industry-leading intelligence powered by data science for offshore wind energy developers, governments and financial institutions.

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Aegir Insights
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Contact

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CVR no.: 39104792

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