Key Takeaways
BOEM, a bureau within the Department of Interior, held a lease sale for offshore wind in the Gulf of Maine, collecting $21.9 million, which will result in $16.5 million in government revenue because of $5.4 million in “bidding credits.”
The two companies rooted in foreign countries were awarded the right to almost 440,000 acres in the Gulf of Maine.
Further permitting will be necessary if the companies can prove viability for their technology known as “floating wind.”
Offshore wind is 4.5 times as expensive to build and 2.3 times as expensive to operate as natural gas-fired combined cycle generation, despite enormous subsidies via the Biden-Harris Inflation Reduction Act.
Half of the eight lease sales offered by the BOEM were not bid.
Maine is researching floating wind technology through a pilot project that will determine its impact on the environment and fisheries.
The recent offshore wind lease auction by the Bureau of Ocean Management in the Gulf of Maine generated $21.9 million from four leases, marking the first commercial sale for floating offshore wind along the Atlantic Coast. Although eight lease areas were up for bids, only four received bids from two developers. This limited interest is likely due to the high costs associated with developing floating wind technology, which is less mature than bottom-fixed offshore wind, along with inflationary pressures on the industry and market uncertainties, particularly related to the upcoming U.S. elections. In August 2024, Maine received an offshore wind research lease that allows for the collaboration of the state with the fishing community, wildlife experts, and industry leaders to establish a 144-megawatt pilot project and conduct studies that will guide future floating offshore wind initiatives in the region and beyond.
The Gulf of Maine lease sale follows the cancellation of a lease auction for offshore Oregon waters, originally scheduled for mid-October by the Biden-Harris administration, which was reportedly due to a lack of interest despite prior expressions from at least five companies. Similar to the Gulf of Maine, the deep waters off Oregon would necessitate floating wind platforms, which are even costlier than traditional bottom-fixed wind turbines. Both options are significantly more expensive for electricity generation compared to alternatives; for instance, offshore wind is 4.5 times more costly to build and 2.3 times more expensive to operate than natural gas combined cycle generation, even with substantial federal subsidies. The cancellation in Oregon followed concerns from Indian Tribes about the sale’s potential impact on their livelihoods and the environment, leading to threats of legal action against the Biden-Harris administration.
Additionally, the cancellation occurred in the wake of a turbine blade failure in July, which resulted in fragments of fiberglass washing ashore near Nantucket, Massachusetts. This incident led to beach closures and heightened safety concerns for beachgoers and fishermen, who feared damage to their vessels. Authorities managed to collect over six truckloads (17 cubic yards) of debris from the affected beaches. As a result, the federal Bureau of Safety and Environmental Enforcement halted operations at the Vineyard Wind project to evaluate whether the “blade failure” could affect other turbines. GE Vernova, the project’s manufacturer, is working on damage control, including a plan to remove the damaged blade and strengthen other components. According to Offshore Mag, this plan involves clearing remaining debris, conducting environmental studies, preparing blades for service, and resuming turbine installation and operations. The blade failure and its consequences are expected to cost the manufacturer around $700 million.
This is not the first time turbine blades have disintegrated. According to National Wind Watch, blades have been destroyed in “Germany, Sweden, Lithuania and the United Kingdom in recent years.”
The Gulf of Maine Bids
Avangrid won Lease OCS-564 for $4.9 million, covering 98,565 acres, and Lease OCS-568 for $6.2 million, covering 124,897 acres—both located approximately 29.5 nautical miles from Massachusetts. Invenergy won Lease OCS-562 for $4.89 million, covering 97,854 acres about 46.2 nautical miles from Maine, and Lease OCS-567 for $5.88 million, covering 117,780 acres about 21.6 nautical miles from Massachusetts. Avangrid is mostly owned by Iberdrola (81.5%), a Spanish company, and managerial control of Invenergy is with a Canadian pension fund manager.
According to the Bureau of Ocean Management (BOEM), the recent sale generated over $5.4 million in bidding credits, which represent binding commitments from companies to invest more than $2.7 million in workforce training and domestic supply chain development, along with an additional $2.7 million allocated for fisheries compensatory mitigation. Lessees are also required to make reasonable efforts to establish a project labor agreement for the construction phase of any projects in the leased areas. They must develop communication plans to engage with Tribes, agencies, and the fishing community, as well as provide semi-annual reports detailing their engagement activities with Tribes and local communities. These bidding credits will effectively lower the amount owed to the Treasury for any successful bids by $5.4 million.
The leases do not authorize the construction or operation of offshore wind facilities but grant the right to submit a project plan for BOEM’s review, from which BOEM will develop an Environmental Impact Statement (EIS) that analyzes the impacts of the proposal before approving the construction and operations plan. The EIS is to be prepared in consultation with Tribes, government agencies, and from input from stakeholders, ocean users, and the public. Despite the intent, the Oregon lawsuit contested the BOEM’s environmental review, which had concluded that issuing the lease sales would have “no significant impacts to people or the environment.”
According to the Tribal Council Chair, BOEM’s evaluation regarding the Oregon lease sale primarily concentrated on the effects of the lease sale and site assessments, “ignoring” the inevitable consequences that the construction and operation of private wind energy projects would have on coastal resources, the tribe, commercial fisheries, and local residents. The tribe also said BOEM’s approval of the lease sale was politically motivated and rushed as the head of the government agency involved admitted in meetings that she was pressed by the Biden-Harris White House to complete offshore wind projects.
Conclusion
Despite the high cost of offshore wind technology, even after applying federal subsidies which are paid by taxpayers, the Biden-Harris administration is moving ahead with offshore wind lease sales, this time in the Gulf of Maine. Two developers have bid on four of eight leases, providing nearly $22 million in revenue. Despite the incoming revenue from the lease sales, consumers will be on the hook for the exorbitant costs of wind-generated electricity and the very expensive cost of backup batteries as the wind does not blow 24/7. Offshore wind has been mired by high costs, noise pollution, blade failure, and disposal issues as the huge blades are not easily disposed of after the 20 to 30 years of an offshore wind facility’s life—less than half that of traditional coal, gas, and nuclear-generating technologies. Nonetheless, the Biden-Harris Administration continues to push for expensive forms of energy such as offshore wind to keep its commitment to the Paris Accords, which it rejoined after President Trump severed the relationship.
