NEW BEDFORD – The biggest competitive auction yet of wind energy leases in federal waters will occur amid global plunges in oil prices and conventional energy costs that could lessen interest in renewable sources, a local industry-watcher said.
“Certainly, the low prices of energy make it more difficult to convince people to invest in higher-priced energy sources like offshore wind,” said John Miller, executive director of the Marion-based Marine Renewable Energy Collaborative. “The drops this year are certainly an indication that there are unpredictable (fluctuations) in the market.”
The U.S. Department of Labor announced recently that its consumer price index dropped 0.6 percent in December, the biggest one-month drop in six years. The drop is fueled by falling gas prices that have plunged more than 40 percent from their 2014 peak last April, according to a Jan. 12 report by AAA.
Cheap carbon-based energy could deflate interest in wind power ahead of the Jan. 29 auction of leases in waters south of Martha’s Vineyard. The regional wind industry recently took a separate hit to the jaw, when utility giants NStar and Northeast Utilities announced the termination of their contracts to buy wind power generated by Cape Wind in Nantucket Sound, saying Cape Wind failed to meet critical financing milestones.
The mood remained bullish, though, at the Bureau of Ocean Energy Management (BOEM), which will auction off four lease areas in more than 742,000 acres in the Massachusetts Wind Energy Area on Jan. 29. It’ll be the bureau’s fourth competitive auction of wind energy leases and the biggest yet in terms of acreage and number of separate lease areas sold.
“We’re expecting strong commercial interest in the upcoming lease sale – so far, we have 12 companies that have been determined by BOEM as qualified to participate,” BOEM spokesperson Tracey Moriarty said earlier this month.
That doesn’t mean all 12 will bid, Moriarty noted – the number of bidders won’t be known until the date of the auction, which will occur online.
“We hope to be able to announce the winners that day,” she said.
Moriarty said an auction of leases off New Jersey’s shores could occur later in 2015, with more states likely to follow.
“Then we’ve got New York, we’ve got North Carolina and we’ve got other areas that are more in the planning stages,” she said, naming South Carolina as a potential future auction site, as well.
New Bedford city officials, including Mayor Jon Mitchell, remained optimistic about the wind industry’s future in southeastern Mass. earlier this month, after news of the utilities’ withdrawals from Cape Wind.
Miller expressed a similar sentiment Friday.
“There’s still a tremendous amount of optimism for wind, and the areas off our south coast represent a significant amount of generation capability,” Miller said.