[co-author: Joshua Sturtevant*]
On August 14, the Bureau of Ocean Energy Management (BOEM) held an auction for two offshore wind areas in the Central Atlantic off the coasts of Delaware, Maryland and Virginia. While seventeen companies were qualified to bid on the areas in the Final Sale Notice, only six companies made bids during the auction, continuing a recent trend of considerably fewer bidders than qualified entities in offshore auctions. After seven rounds of bidding, both areas were awarded for a total of $92.6M.
The first lease, located off the coast of Delaware, sold for just over $75M at a per acre price of $739.34 per acre. The second lease, for an area approximately 35 nautical miles from Chesapeake Bay, sold at a per acre price of $100/acre for a total of $17,650,500.
While the auction was arguably more successful than the recent Gulf of Mexico auction, which saw two areas out of three no-bid, the Central Atlantic pricing continued the downward trend seen since the peak of the market in 2022 when New York Bight areas leased for approximately $9,000/acre.
Despite challenges in the market, BOEM expressed satisfaction with the results; according to BOEM Director Elizabeth Klein, “Today’s lease sale represents a major milestone in meeting the demand for clean renewable energy along the East Coast.” Based on the BOEM’s projections, the “[l]eased areas have the potential to power over 2.2 million homes with clean energy.”
BOEM is currently evaluating next steps for the U.S. offshore market following receipt of an unsolicited lease request in the Gulf of Mexico for areas located off the coast of southeast Texas which had been previously identified by BOEM as suitable for leasing in 2021. BOEM has also issued a Request for Competitive Interest (RFCI) seeking comments and input regarding interest in the areas. If BOEM receives one or more indications of interest from qualified entities, it may decide to move forward with a competitive lease sale. Meanwhile, if BOEM does not receive competing indications of interest from qualified companies, it may move forward with a noncompetitive lease issuance. BOEM additionally announced on September 3rd that it is initiating the process for a second auction in the Central Atlantic area as it published a Call for Information and Nominations inviting public feedback on development in the area.
Stay tuned for more updates on the offshore wind space.
*Joshua Sturtevant is a law clerk in the firm's New York office.
