Offshore Wind Rights Near Carolinas Beckon Bidders to Auction

(Bloomberg) -- At least five companies are vying Wednesday for the chance to install turbines off the coast of North and South Carolina in a government auction that tests the allure of offshore wind even when no state mandates require it.

By midday, developers had offered almost $100 million for the two tracts up for grabs in Carolina Long Bay, adjacent to Myrtle Beach, South Carolina, with bidding likely to last several more hours. Together, the lease areas, which span about 55,000 acres (22,258 hectares), can hold enough turbines to provide 1.3 gigawatts of generation capacity, enough to power almost 500,000 homes, according to the Interior Department.  

The sale comes on the heels of a record-breaking $4.4 billion auction of wind farm rights off the New York coast in February that underscored surging enthusiasm for renewable energy, fed by Northeast U.S. state commitments to purchase carbon-free electricity. By contrast, the Carolina auction covers a smaller area and isn’t buoyed by nearby state mandates for offshore wind power that have created near-guaranteed demand further up the U.S. East Coast. 

“The degree of the interest in this auction could demonstrate whether or not project developers see a viable opportunity in waters next to states that do not have these kind of policies,” said Timothy Fox, vice president of the ClearView Energy Partners research firm. “Do people see offshore wind as a viable resource outside of state mandates?”

Though US coastal states have made commitments to buy about 42 gigawatts of electricity from offshore wind installations, North and South Carolina aren’t among them. Still, the states are clamoring for renewable power, and under a law enacted in October, North Carolina’s electric sector must slash greenhouse gas emissions 70% by 2030.

Read More: Biden Wind-Farm Sale Opens Path to Turbines on Nearly All Coasts

Sixteen companies had registered as potential bidders, including units of the European energy giants EDF Group and Orsted AS, as well as offshore oil heavyweights BP PLC and Shell PLC.  Units of utilities Duke Energy Corp. and Avangrid Inc. also were in the lineup, as well as developers Invenergy LLC and Arevia Power LLC.

The auction is unfoldeding over multiple rounds Wednesday, with anonymous bids growing rapidly from $50 to $859 per acre by midday. In the February sale of leases between Long Island and New Jersey, tracts ultimately fetched an average of $8,951 per acre, besting the previous high-water mark of $1,043 per acre set in 2018. This time, bidding may get a lift from a 20% credit that developers can claim by committing to invest in programs to advance offshore wind energy workforce training or supply-chain development.

“For the first time, the federal government is using this credit system to directly support investments into the offshore wind supply chain,” said Sam Salustro, director of coalitions and strategic partnerships with the Business Network for Offshore Wind, a nonprofit that promotes the industry. The auction “is really critical for unlocking the full potential of the US supply chain.” 

(Updates with bidding details in first two paragraphs.)

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