Biden Admin Announces First Offshore Wind Sale in Gulf of Mexico

U.S. President Joe Biden speaks on renewable energy at the Philly Shipyard in Philadelphia, Penn., on July 20, 2023. (Spencer Platt/Getty Images)

The Biden administration on Thursday announced it will hold an offshore wind energy auction in the Gulf of Mexico in August, the first such sale in the area.

The three leases are located off the Texas and Louisiana coasts. These areas have the potential to generate approximately 3.7 gigawatts (GW) and power almost 1.3 million homes, according to the U.S. Department of the Interior (DOI).

The auction, to be held by the Bureau of Ocean Energy Management on Aug. 29, will advance the Biden administration’s efforts to deploy some 30 GW of offshore wind energy by 2030 to help reach a “carbon-free electricity sector” by 2035, according to the DOI.

“Thirty gigawatts is enough to power 10 million homes, and it’ll help put us on a path to 100 percent clean energy [electricity] by 2035,” President Joe Biden said in Philadelphia on a trip to highlight the administration’s efforts to tackle what it deems as climate change driven by the use of fossil fuels.

Details of Auction

Companies will bid on the right to develop some 102,480 acres offshore Lake Charles, Louisiana, as well as two other lease areas totaling nearly 200,000 acres offshore Galveston, Texas—one comprising 102,480 acres and the other 96,786 acres.

To accelerate the growth of offshore wind, the Biden administration previously said in a Feb. 22 press release that it would provide extended tax credits under the Inflation Reduction Act and Bipartisan Infrastructure Law to bolster manufacturing and deployment.

The Gulf auction would allow for credits up to 30 percent of the cash value of the bid for workforce development, supply chain investment, and fisheries compensation funds.

According to a sale document (pdf), companies prequalified to bid at the auction include units of European energy companies Equinor, Shell, RWE, and TotalEnergies, all of which are already developing U.S. offshore wind leases. Equinor and Shell also have major oil and gas operations in the Gulf.

Newer entrants to the U.S. offshore wind industry include divisions of South Korea’s Hanwha, U.S. renewable energy developer Hecate Energy, and Houston private equity firm Quantum Capital.

The Final Sale Notice will be published in the Federal Register on July 21, and will provide detailed information about the final lease areas, lease provisions and conditions, and auction details.

Offshore winds tend to blow harder and more uniformly than on land, which means it has potential to produce significantly more energy per amount of capacity installed.

However, the Gulf’s relatively lower wind speeds, soft soils, and hurricanes are potential challenges the industry could face that are unique to the region. The U.S. Southeast also has low power prices that could make it harder for higher-cost offshore wind generation to compete for electricity contracts.

The process to identify the areas to be auctioned in the Gulf was “based on rigorous science” to “maximize operational efficiency and limit adverse interactions with other industries or natural resources,” Michael Celata, BOEM’s regional director for the Gulf of Mexico, said in an internal memo (pdf) in 2022.

Concerns

A comprehensive report (pdf) compiled in March said that building and operating offshore wind farms could majorly impact fishing and the marine environment. The report, compiled by federal agencies National Ocean and Atmospheric Administration (NOAA) and BOEM, and the Responsible Offshore Development Alliance, a coalition of fishing industry groups, said that development plans for offshore wind are outpacing the state of ocean science.

The report noted that noise, vibration, electromagnetic fields and heat transfer associated with offshore wind farms could alter the marine environment, including changing fish behavior. It also discusses other topics such as the potential for fishermen to be displaced from established fishing grounds, and how wind turbines could change oceanographic conditions.

Some opponents of offshore wind say that preparation for offshore wind farms has been responsible for the deaths of more than 30 whales and a dozen dolphins along the Mid-Atlantic coastline since December 2022.

NOAA and BOEM have both denied any link between offshore wind preparation and whale deaths.

Promise of ‘Good-Paying’ Jobs

The Gulf of Mexico is a major center in the U.S. offshore oil and gas sector. It represents about 15 percent of the United States’ annual oil production.

The National Ocean Industries Association (NOIA), which represents the offshore oil, gas, as well as wind industries, issued a statement in support of the auction and said there was “remarkable synergy between offshore oil and gas and offshore wind.”

“With the introduction of offshore wind in the Gulf Coast, numerous local companies will now have the opportunity to actively participate in the construction of new wind projects closer to home,” NOIA President Erik Milito said in a statement.

A wind turbine generates electricity at the Block Island Wind Farm—the first commercial offshore wind farm in the United States—near Block Island, Rhode Island, on July 7, 2022. (John Moore/Getty Images)

The offshore wind auction, as well as other green energy pursuits, can bring “good-paying clean-energy manufacturing jobs,” Mr. Biden said Thursday at the Philly Shipyard, where a company is having workers from multiple unions start building a first-of-its-kind vessel, called the Acadia, which will play a role in building offshore wind farms.

The Biden administration previously held three other offshore wind lease auctions. This included the first-ever such action off the Pacific coast in California, as well as the largest-ever such U.S. sale in 2022 for areas off the New York and New Jersey coasts, which attracted a record $1.5 billion in bids.

Mr. Biden said in his speech Thursday that under his administration, there’s been “more than $16 billion in new offshore wind investments, including 18 offshore wind vessels, 12 manufacturing facilities, and 13 ports.”

Scottie Barnes and Reuters contributed to this report.