PROVIDENCE – In what is sure to be seen as an affirmation of their industry’s prospects, a scrum of offshore wind developers is poised to pay an unprecedented amount of money for the latest set of leases being auctioned off in federal ocean waters near Rhode Island and Massachusetts.
When the federal Bureau of Ocean Energy Management suspended its auction Thursday night for the three leases located in waters about 51 miles southeast of Block Island, the bids for each had reached between $91 million and $101 million – more than twice the highest amount paid in the past for an offshore wind lease in the United States and a range that compares favorably to payments for oil and gas projects.
The bureau, part of the U.S. Department of the Interior, described the day as “historic.” In a tweet, Interior Secretary Ryan Zinke said, “We have something big going on off the coast of Massachusetts.”
The auction, which resumes Friday morning, will winnow down which developers will have the rights to leases in the waters. Whoever wins will still have to make annual rent payments of nearly $400,000 on top of their bids.
The competition started at 9 a.m. Thursday, and by the time it wrapped up for the day at 6 p.m., it had gone through 24 rounds of bidding. By comparison, an auction of leases in the same general area three years ago attracted only two bidders and their winning offers were both less than $250,000.
But a lot has changed since then, namely the successful completion of the first offshore wind farm in the nation, the five-turbine test project off Block Island that started supplying electricity to the power grid two years ago.
The new leases are part of a 1,418-square-mile expanse of waters designated for offshore wind development by the federal government that stretch southeast from a point between Block Island and Martha’s Vineyard to south of Nantucket. There are four other leases in the area: one held by New Bedford-based Vineyard Wind and three held by Orsted U.S. Offshore Wind, which is headquartered in Boston and Providence.
The furious interest in the new leases – 19 companies qualified to take part in the auction – came even though waters in the area are deep and far from the nearest shore, where an electric transmission line would have to make landfall and where development would need to be staged.
It also came despite recent difficulties encountered by the 800-megawatt Vineyard Wind project, which is opposed by a commercial fishing board in Rhode Island and is facing the possibility of losing out on a key approval from regulators in the state. Fishing groups have also objected to the width of proposed transit lanes through the Vineyard Wind and Orsted lease areas.
This is a crucial moment for offshore wind in the United States. The Block Island Wind Farm – developed by Deepwater Wind, the Providence company now part of Orsted – is a small project, and even then, it took nearly a decade to complete.
The new proposals are 10 or even 20 times larger and are looking to get in the water in a much shorter time frame.
That tight schedule has led to the current disagreement between the Rhode Island Fishermen’s Advisory Board and Vineyard Wind, which would supply power to Massachusetts. The board advises the state’s Coastal Resources Management Council, which, under federal law, has permitting authority over the proposed wind farm because the project would affect Rhode Island fishing activities.
Vineyard Wind has spaced and configured its 84 turbines in a way that fishermen say will make it impossible for them to safely navigate through. The fishermen argue that they will lose access to some of the best squid grounds around, as well as waters rich in lobster and Jonah crab.
The state coastal council decided to hold off on a final vote on the wind farm until the end of January. In the meantime, Vineyard Wind, which says it doesn’t have time to reconfigure the project, is negotiating an agreement with state officials to compensate fishermen.
The fishermen’s board sent a letter to R.I. Gov. Gina Raimondo last week seeking assurances that her office would work “to sustain this valuable fishing community for future generations.” Lanny Dellinger, chair of the board, says that he hasn’t gotten a substantive response from the governor’s office.
“It’s not going the way it should be going,” he said. “Those negotiations should be taking place with the people whose livelihoods are at stake.”
The governor’s office referred questions about the talks to the Office of Energy Resources. Carol Grant, commissioner of the office, said that the state is taking fishing interests into account.
“In all our conversations with the wind developers, the economic value of our fishing industry and the impact of these projects on marine resources are central considerations,” she said in an email. “That will continue to be the case.”
With the breadth of development set to pick up, Rhode Island recently got a piece of good news. The National Oceanic and Atmospheric Administration on Dec. 7 granted the state coastal council’s request to extend its oversight to the entire Vineyard Wind and Orsted lease areas.
The decision gives the council authority over the areas by right, rather than having to prove the state’s interests on a case-by-case basis.
“We wanted to put everything in place to protect the state’s interests,” said council executive director Grover Fugate.
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