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Vista Projects
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Vista Projects

Wind Windfall! California Offshore Wind Auction Is Second-Biggest in Clamor for Renewable Power

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European energy heavyweights dominated a government auction of offshore wind rights Wednesday, with successful bidders spending a combined $757 million on leases for floating renewable power projects along the coast of California.

The winning bidders included US joint ventures and units affiliated with Norwegian oil giant Equinor ASA, France’s Engie SA and Denmark’s Copenhagen Infrastructure Partners P/S.

The foreign domination of what was the first-ever sale of offshore wind leases off the West Coast reflects the advantage other nations have with years of experience of installing turbines at sea — though the US is working to catch up.

“These companies have the expertise, the experience and the know-how — and they are following where there’s real opportunity,” said Timothy Fox, an analyst at ClearView Energy Partners. “The Biden administration and coastal states have made it a priority to drive offshore wind. It’s not surprising that international companies with all this experience are going to be interested in developing projects in the US.”

Invenergy California Offshore LLC, a unit of the large Chicago-based renewable developer Invenergy LLC, was the one US-backed entity among the five companies that nabbed the Pacific leases after two days and 31 rounds of bidding, setting the stage for development later this decade. The other winners were RWE Aktiengesellschaft’s RWE Offshore Wind Holdings LLC and Central California Offshore LLC (a joint venture of Engie, EDP Renovaveis SAP’s EDP Renewables North America LLC and the Canada Pension Plan Investment Board).

Leases sold in the auction — the second-largest offshore wind sale in US history — are critical to fulfilling President Joe Biden’s goal of deploying 30 gigawatts of offshore wind by 2030. Developers are already pursuing numerous projects in the Atlantic, where the waters are shallow enough to install conventional turbines on the seabed.

But the Pacific waters off California require more expensive, still-developing floating wind technology, one factor that deterred bids in the Interior Department auction. Foreign-backed firms that won leases ultimately may partner with US developers to nurture both the projects and a new floating wind industry over the next decade.

“By tapping into the vast wind resources along our country’s Pacific coast, we can cement the United States as a global leader in floating offshore wind technology and supercharge our deployment of clean, affordable and reliable wind power,” said Sam Salustro, vice president of the Business Network for Offshore Wind.

The provisional winners committed to spend an average of $2,028 per acre on the territory near Eureka in northern California and Morro Bay on the central coast — the third-highest sum put forth in a US offshore wind auction, and just under the $2,861 per acre collected in a sale of wind leases near North and South Carolina in May.

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The bids were well short of the $8,951-per-acre high-water mark set during a blockbuster February sale of leases near New York that was buoyed by state power-purchase commitments and growing developer confidence about the regulatory environment.

By contrast, the Pacific leases come with none of the same guarantees — and far more regulatory and development risk — which may have prompted some industry caution, analysts said.

Wind projects on the leases could ultimately provide 4.5 gigawatts of renewable generation capacity, electricity that’s necessary to help California meet its clean energy targets and complement solar power that ebbs in the afternoon. The urgency to find new supplies has been underscored this year by challenges meeting power demands amid tight natural gas markets and a prolonged drought that has suppressed hydropower generation.

California Wind Rush | The US government is auctioning five offshore wind leases off central and northern California.

Yet the projects still face significant technological and regulatory challenges. While California is clamoring for clean energy, it’s not clear what kind of prices regulators and consumers will tolerate.

Offshore wind advocates said the sale creates a commercial opening for the US, even in an established industry. “The California lease sale gives the US a chance to lead the emerging floating wind sector,” National Ocean Industries Association president Erik Milito said in an emailed statement.

The five tracts auctioned Wednesday span 373,000 acres (151,000 hectares), with the leases near Eureka drawing the most interest. Most of the winning companies have active leases or operations in the US. Several, such as Equinor, have been eyeing Pacific wind opportunities for years.

Molly Morris, president of Equinor Wind US, said California offers big potential. “The US West Coast is one of the most attractive growth regions for floating offshore wind in the world due to its favorable wind conditions and proximity to markets that need reliable, clean energy.”

Provisional Winner Location Acreage Price Cost/Acre
RWE Offshore Wind Holdings LLC Northern California 63,338 $157.7 million $2,490
California North Floating LLC (a unit of Copenhagen Infrastructure Partners P/S) Northern California 69,031 $173.8 million $2,518
Equinor Wind US, LLC Southern California 80,062 $130 million $1,624
Central California Offshore Wind LLC (a joint venture including EDP Renewables North America LLC, Engie SA and Canada Pension Plan Investment Board) Southern California 80,418 $150.3 million $1,869
Invenergy California Offshore LLC Southern California 80,418 $145.3 million $1,807

–With assistance from Josh Saul.

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