First U.S. Offshore Wind Auction In Gulf Of Mexico Attracts One Winning Bid

The Biden administration’s first ever auction of offshore wind development rights in the Gulf of Mexico ended with a single $5.6 million winning bid on Tuesday, reflecting meager demand for the clean energy source in a region known for its oil and gas production.

That result represented a fraction of the billions of dollars of bids secured in an offshore wind lease sale off New York and New Jersey in February 2022.

Those states have passed laws that require utilities to buy power from offshore wind projects – mandates considered critical for a technology that is estimated to produce electricity at twice the cost of a natural gas plant.

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

The sale was, nonetheless, cast by the President Joe Biden’s administration as a major milestone in his agenda to make offshore wind a cornerstone of U.S. efforts to fight fossil-fuel driven climate change.

“Today’s lease sale represents an important milestone for the Gulf of Mexico region — and for our nation — to transition to a clean energy future,” said Bureau of Ocean Energy Management (BOEM) Director Elizabeth Klein.

She said the Louisiana lease had the potential to power about 435,400 homes and create hundreds of jobs. 

According to a BOEM document, fifteen companies were qualified to bid at the sale.

They included offshore wind development arms of European energy companies Equinor (EQNR.OL), Shell (SHEL.L), RWE (RWEG.DE) and TotalEnergies (TTEF.PA), all of which are already developing U.S. offshore wind leases in other regions. Equinor and Shell also have oil and gas operations in the Gulf.

Developers had been looking beyond the grid in the Gulf, with some eyeing the sale as a possible way to fuel a green hydrogen supply chain for the region’s vast industrial corridor.