5 companies win California offshore wind energy leases with $757 million in bids

After two days of bidding, five companies on Wednesday won leases to develop offshore wind energy farms in the Pacific Ocean off California’s coast.

The companies bid a total of $757.1 million for the 373,268 acres of ocean spaces where floating wind turbines can be erected to generate up to 4.5 gigawatts of electricity. The auction was conducted by the U.S. Bureau of Ocean Energy Management (BOEM), which is an arm of the U.S. Department of the Interior.

Three leases were offered off the Central Coast in the so-called Morro Bay wind energy area, while two leases were offered off the Northern California coast titled the Humboldt wind energy area.

Equinor Wind US LLC made the winning $130 million bid for an 80,062-acre lease in the Morro Bay area. Equinor Wind is an arm of Equinor, a multi-billion-dollar global petroleum refining company.

Central California Offshore Wind LLC won with a $150.3 million bid for one of two 80,418-acre leases in the Morro Bay area. According to online corporation database opencorporates, Central California Offshore Wind is managed by an East Coast offshore wind energy company, Ocean Winds North America LLC, which formed a joint venture with the Canada Pension Plan Investment Board, Golden State Wind, to win the lease.

And Invenergy California Offshore LLC bid $145.3 million for the second 80,418-acre lease in the Morro Bay area. Invenergy is a privately held, global developer of renewable energy, according to its website.

For the Humboldt lease areas, RWE Offshore Wind Holdings LLC bid $157.7 million for a 63,338-acre lease. And California North Floating LLC bid $173.8 million for 69,031 acres.

“The Biden-Harris administration believes that to address the climate crisis head on, we must unleash a new era of clean, reliable energy that serves every household in America. Today’s lease sale is further proof that industry momentum — including for floating offshore wind development — is undeniable,” U.S. Secretary of the Interior Deb Haaland said in a prepared statement. “A sustainable, clean energy future is within our grasp and the Interior Department is doing everything we can to ensure that American communities nationwide benefit.”

Central Coast Congressman Salud Carbajal, D-Santa Barbara, touted the auction’s success in a statement Wednesday.

“This week’s auction, which drew in three-quarters of a billion dollars in interest from the private sector, proves that wind can and will be an economic powerhouse for the Central Coast,” he said.

California bids not as competitive as NY auction

The larger of the Humboldt wind energy area leases garnered the highest per-acre bid at $2,518 per acre. The smaller Northern California offshore lease was bid at $2,490 per acre, according to BOEM.

And in the Morro Bay wind energy area, the highest bid per-acre was by Central California Offshore Wind, at $1,869 per acre.

The California auction was generally less competitive than another offshore wind energy auction conducted by BOEM off the coast of New York in February.

That auction generated bids as much as $10,696 per acre, and a total of $4.37 billion was bid for the 488,200 acres offered for leases.

However, the New York auction was for fixed-bottom wind turbines, whereas the California auction is for floating turbines. That’s because the ocean off California’s coast is much deeper where the leases are located.

Floating offshore wind energy is far less common around the world. In total, global floating offshore wind energy capacity is at about 123.4 megawatts, according to a U.S Department of Energy report released earlier this year.

Comparatively, there are more than 50 gigawatts of fixed-bottom offshore wind capacity installed around the world, according to the Department of Energy.

The Morro Bay wind energy area spans about 376 square miles with capacity to produce 2.9 gigawatts of electricity and is the largest proposed floating offshore wind project in the United States. The Humboldt wind energy area spans about 207 square miles with capacity to produce 1.6 gigawatts of electricity.

Companies may apply for bidding credits

The federal government allowed for companies bidding in the California auction to apply for bidding credits for a reduced final selling price of their lease. Which companies have qualified for bidding credits, and how much those credits may be, has not yet been announced.

Up to 20% off their winning bid could be awarded should the company show it will establish a pathway for offshore wind energy workforce training, supply chain development or a combination of the two, according to BOEM.

Another 5% could be awarded off the winning bid if the company shows it has entered into agreements with communities, industries and tribes that have historically used and benefited from the ocean space set for offshore wind energy development.

This agreement could include “payments into a special purpose fund, such as payments to support gear changes, navigation technology improvements, and other efforts to improve safety and navigation, or to compensate the fishing and related industries whose use of the geographic space of the lease area is impacted by the lessee’s potential offshore wind development,” according to the final sale notice.

Amanda Lefton, BOEM director, noted in a prepared statement on Wednesday that the bidding credits will result in “tangible investments” for the workforce and local communities.

“This auction commits substantial investment to support economic growth from floating offshore wind energy development — including the jobs that come with it,” Lefton said. “These credits and additional lease stipulations demonstrate BOEM’s commitment to responsibly grow the offshore wind industry to achieve our offshore wind goals.”