Development of projects in the country's ageing offshore oil & gas province has huge potential for both pure-play green power generation and decarbonization of hydrocarbon production. But whether developers will bid big or sit on their hands remains to be seen
The US is moving ahead with the first-ever offshore wind leasing in the Gulf of Mexico, with President Joe Biden this week announcing the opening of a three-zone auction off Texas and Louisiana that could lead to projects totaling almost 4GW – green electricity supply for some 1.3m homes – being built in the coming years.
The tender, which comes in the wake of the government’s approval earlier this month of a third commercial-scale, offshore wind project, Orsted’s 1.1GW Ocean Wind 1, is a key milestone on the leasing path unveiled by Washington in 2021, and is being held at critical time for America’s sector. For while overall project development work offshore is gearing up, clouds are gathering over the market due to inflationary and supply chain pressures.
So what sizes of bid might be likely in this first ever offshore wind lease auction in the US Gulf? From a comparatively low price point in the first US auction for offshore wind sites off Massachusetts in 2018, leases from the three tenders in 2022 have brought in both sky high results in New York Bight, where RWE alone paid $1.3bn for acreage, and comparatively lower ones off the Carolinas and California.
Though projects arising out of these four completed lease sales are still moving through the pipeline towards construction, recent rumblings around power purchase agreements being terminated or renegotiated point to the potential for an underwhelming turn-out for the US Gulf auction.
Will offshore wind developers see a benefit from proximity to potentially transferable/compatible oil & gas resources in the states around the US Gulf and what appetite will they have, as cost levels and route to market remain uncertain?
· Contact Aegir's Head of Research Maria Bohsen for access to our new lease price bench-marking reports, launching in the autumn.
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