Deepwater Wind won the nation’s first ever lease auction for commercial offshore wind energy development Wednesday.
The U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) held the auction for two parcels, totaling more than 164,000 acres, in BOEM’s Wind Energy Area on the Outer Continental Shelf roughly 17 miles south of Rhode Island between Block Island and Martha’s Vineyard.
Deepwater Wind plans to develop the Deepwater Wind Energy Center, a utility-scale wind farm of up to 200 turbines with a regional transmission system linking Long Island to southeastern New England.
“This is an enormous step forward for the industry,” Deepwater Wind CEO Jeffrey Grybowski, said in a statement. “This is the best site for offshore wind in the United States, bar none. Our Deepwater Wind Energy Center project will produce clean power and jobs for an entire region. It’s very exciting.”
Deepwater won the leasing rights with a bid of more than $3.8 million in the 11th round of the auction. Deepwater previously paid $900,000 to participate in the auction, which will go toward the bid amount. The remaining approximately $2.9 million will be paid in the coming months when the official lease is signed for the sites, according to Deepwater. Deepwater will also pay the federal government annual rent payments of approximately $500,000 beginning this year until a wind farm is operational on the site.
Once the farm is operational, Deepwater Wind is obligated to pay the federal government an annual royalty fee based on the value of the wind energy produced.
According to Deepwater, construction on the site could begin as early as 2017, with commercial operations by 2018. The project will reportedly produce enough energy to power 350,000 homes and displace more than 1.7 million tons of carbon dioxide emissions annually.
The BOEM said when built, the area could generate enough combined energy to power more than 1 million homes.
“When you think about the enormous energy potential that Atlantic wind holds, this is a major milestone for our nation,” Secretary of the Interior Sally Jewell said in a statement. “A lot of collaboration and thoughtful planning went into getting to this point, and we’ll continue to employ that approach as we move forward up and down the coast to ensure that offshore wind energy is realized in the right way and in the right places. Offshore wind is an exciting new frontier that will help keep America competitive, and expand domestic energy production, all without increasing carbon pollution.”
Deepwater said the majority of the turbines in the project will be located 25 miles to 30 miles from shore, with no turbine located any closer than approximately 13 miles from land.
In the auction, Deepwater Wind was the only developer holding a joint development agreement with a neighboring state, in this case, Rhode Island.
Deepwater Wind became Rhode Island’s “preferred developer” for offshore wind after a competitive process in 2008. The Deepwater Wind Energy Center is the “utility-scale offshore wind farm” referred to in the agreement with the state, according to Deepwater.
This auction was the first of several that will be held by the BOEM for the leasing rights to develop offshore wind energy systems in federal waters.
The next auction will be held Sept. 4 for nearly 112,800 acres off the coast of Virginia. The BOEM is expected to announce additional auctions for wind energy areas offshore Massachusetts, Maryland and New Jersey later this year and in 2014.
U.S. Sens. Jack Reed and Sheldon Whitehouse noted the importance of Deepwater’s success and the auction’s outcome for Rhode Island.
“There are still many steps involved in this project becoming a reality, and throughout that process, there needs to be a clear and iron-clad commitment to jobs in Rhode Island, after all the state has done in this area,” said Sen. Reed.
Sen. Whitehouse added, “The first competitive auction for wind energy development in the nation is an important step in a process that could ultimately bring badly needed jobs to our state and reduce our dependence on fossil fuels. Rhode Island is poised to be a leader in the development of wind energy because of a state planning process that engaged all stakeholders, and federal funding for infrastructure upgrades to Quonset and ProvPort. I look forward to where we go from here.”
Deepwater Wind will continue to actively develop the Block Island Wind Farm to be located about three miles off the coast of Block Island.
The permits for the 30-megawatt wind farm are currently under review by federal and state agencies.
According to Deepwater, construction on the Block Island project is expected to begin in 2013 with the wind farm in service by 2015.
Deepwater said the project remains “on target” to be the nation’s first offshore wind farm.
“It’s good news for Deepwater and I wish them the best of luck with that project,” Narragansett Town Council President James Callaghan said of Deepwater’s success in Wednesday’s auction. “But we still have to make a decision on Narragansett, Block Island and the cable, and I believe that will be coming up relatively soon.”