The Biden administration is set to hold an offshore wind energy auction in the Gulf of Mexico in August, marking the first-ever sale of its kind in the region. The auction, scheduled for August 29th, is intended to advance the administration’s goal of deploying 30 GW of offshore wind energy by 2030. The auction will be overseen by the Bureau of Ocean Energy Management and will offer leases for three areas located off the coasts of Texas and Louisiana. These areas have the potential to generate approximately 3.7 GW of energy, enough to power nearly 1.3 million homes.
President Joe Biden has been vocal about his commitment to transitioning towards clean energy sources in order to combat climate change. During a recent visit to Philadelphia, he highlighted the importance of offshore wind energy in achieving a carbon-free electricity sector by 2035. He emphasized that the 30 GW of offshore wind energy would be sufficient to power 10 million homes and contribute to the administration’s goal of achieving 100 percent clean energy by 2035.
The auction will allow companies to bid on the rights to develop three lease areas totaling nearly 200,000 acres offshore Galveston, Texas, and Lake Charles, Louisiana. Notable companies that have already prequalified to bid at the auction include Equinor, Shell, RWE, TotalEnergies, Hanwha, Hecate Energy, and Quantum Capital. These companies are already involved in the development of U.S. offshore wind leases, and their participation in the auction reflects the growing interest and investment in the offshore wind industry.
To accelerate the growth of offshore wind, the Biden administration has also announced its intention to provide extended tax credits under the Inflation Reduction Act and Bipartisan Infrastructure Law. These tax credits will support manufacturing and deployment efforts in the offshore wind sector. Additionally, the Gulf auction will provide credits for workforce development, supply chain investment, and fisheries compensation funds, making it an attractive opportunity for companies looking to enter or expand their presence in the offshore wind industry.
Offshore winds have the advantage of blowing harder and more uniformly than on land, which means they have the potential to produce significantly more energy per unit of installed capacity. However, there are unique challenges associated with offshore wind development in the Gulf of Mexico. The region experiences relatively lower wind speeds, soft soils, and the threat of hurricanes. Additionally, the low power prices in the U.S. Southeast could pose a challenge for offshore wind generation to compete for electricity contracts.
Prior to the auction, a comprehensive report compiled by federal agencies and the Responsible Offshore Development Alliance raised concerns about the potential impact of offshore wind farms on fishing and the marine environment. The report highlighted issues such as noise, vibration, electromagnetic fields, and heat transfer associated with offshore wind farms, which could alter fish behavior and oceanographic conditions. Opponents of offshore wind have also claimed that preparation for wind farms has led to the deaths of whales and dolphins along the Mid-Atlantic coastline. However, both the National Oceanic and Atmospheric Administration and the Bureau of Ocean Energy Management have denied any link between offshore wind preparation and marine mammal deaths.
Despite these challenges, the auction presents an opportunity for job creation and economic growth in the Gulf of Mexico region. The National Ocean Industries Association, which represents both offshore oil, gas, and wind industries, expressed support for the auction. The association highlighted the synergy between offshore oil and gas and offshore wind and emphasized the potential for local companies to participate in the construction of wind projects, generating “good-paying clean-energy manufacturing jobs.”
The Biden administration’s push for offshore wind energy has already seen success with previous lease auctions. The administration held the first-ever auction off the Pacific coast in California and the largest-ever sale for areas off the New York and New Jersey coasts, attracting a record $1.5 billion in bids. These auctions have contributed to significant investments in offshore wind, including the development of wind vessels, manufacturing facilities, and ports. President Biden announced that more than $16 billion has been invested in offshore wind under his administration.
With the upcoming auction in the Gulf of Mexico, the Biden administration continues to make progress towards its clean energy goals. The offshore wind sector presents a significant opportunity for job creation and economic development while helping to reduce reliance on fossil fuels and combat climate change.