Today, the Bureau of Ocean Energy Management kicks off the first-ever lease auction for commercial scale deep water floating wind, and the first-ever lease auction in California!
The auction design also boasts several 'firsts', perhaps most notably the introduction of new bidding credits:
- In the California offshore wind auction, bidding credits amounting to 30% of the cash bid can be obtained, which is the highest percentage seen in a BOEM auction so far.
- A 20% bidding credit can be obtained for investing in U.S. work force training or/and supply chain development. This was also used in the Carolina Long Bay auction preceding the California auction.
- On top of this, two new bidding credits of 5% each can be obtained; 5% for having executed or committed to executing a Lease Area Use CBA (Community Benefit Agreement), and 5% for having executed or committed to executing a General CBA with communities expected to be affected by the lease development.
BOEM auction design to avoid one offshore wind developer dominating
Other initiatives to avoid one developer becoming too dominant include rules ensuring that bidders can only win one lease area each, and the rule that affiliated entities cannot bid against each other, which affects around 1/3 of the 43 pre-qualified eligible bidders
The first California offshore wind auction is thus shaping up to be a litmus-test for how much BOEM can influence projects through auction-design, by rewarding local development and engagement instead of only the highest cash bid – and smaller developers with more local presence could reap the benefits.
Fast analysis of California offshore wind auction results
Aegir Insights will follow the auction closely and provide insights to our subscribers quickly after the winners have been announced.
Stay tuned for development of bid prices per round and comparison of bid prices to earlier BOEM auctions!
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