In less than two weeks, the first ever offshore wind lease auction in the Gulf of Mexico is set to open. But what are potential off-take routes for offshore wind in this region?
On 29th of August 2023, the Bureau of Ocean Energy Management (BOEM) will hold a lease auction for three wind energy areas in the Gulf of Mexico, off Texas and Louisiana, that could lead to projects totaling almost 6 GW, suitable for fixed-bottom offshore wind development with shallow water and wind speeds of average around 7 – 8 m/s.
With limited state support, there are three main potential off-take routes for offshore wind in the region:
- Supporting ‘clean’ hydrogen hubs
The lease areas are ideally located to support the creation of 'clean' hydrogen hubs, being close to the US’ biggest network for hydrogen producers, consumers and dedicated hydrogen pipelines. With new tax credits and the opportunity to apply for federal funding to create 'clean' hydrogen hubs – which several players in the region have already done – hydrogen production is poised to be a main driver and off-take route for offshore wind in the Gulf of Mexico.
- Decarbonization of heavy industries
Offshore wind could play a key role in decarbonizing heavy, hydrogen-dependent industries in the Gulf of Mexico area via corporate PPAs.
- Off-take to grid
In Louisiana, off-take to grid via PPAs with utilities may also be an option due to the state's ambitious targets for offshore wind and more renewables in the electricity mix, and interest in implementing Renewable Energy Certificates. However, projects in BOEM lease areas may need to compete with projects in state waters, as Louisiana is currently looking at offshore wind developments in state waters.
Aegir Insights' Market Intelligence
In light of this upcoming auction, we have just released an updated market report on the Gulf of Mexico to our clients, covering strategic plays and site economics in this area.
Reach out to us to learn more about Aegir Insights' market intelligence service and Auction Intelligence package, covering timelines, criteria and strategic angles of upcoming global offshore wind auctions.