North American Windpower

The State of the U.S. Offshore Wind Market

The U.S. Department of the Interior’s Bureau of Ocean and Energy Management (BOEM) to date has auctioned 16 U.S. offshore wind energy areas (WEAs) designated in federal waters for offshore wind development. Each area has been leased to a qualified offshore wind developer.

The areas are located along the East Coast, from North Carolina to Massachusetts, and represent a total potential capacity of 21,000 MW of offshore wind power generation.

Market growth

The U.S. offshore wind market currently stands at 16,970 MW, representing a subset of the total potential generation capacity. The market is defined as the amount of offshore wind electricity that could be produced by a state-supported financial mechanism. In the U.S., these financial mechanisms are usually either a power purchase agreement (PPA) or an offshore renewable energy credit (OREC).

In January, New York announced more than a three-fold increase in its commitment to support the development of offshore wind, from 2,400 MW to 9,000 MW. This jolted the U.S. market, with a 64% increase in market size.

More than $1 billion spent

Remarkably, nearly $1 billion was spent on U.S. offshore wind lease rights and projects in the last quarter of 2018. In October 2018, Ørsted acquired Deepwater Wind’s portfolio of lease rights and projects with government-backed financial mechanisms for $510 million. In December, three Massachusetts leases were won at a cost of $405 million, collectively. Equinor paid $135 million; Mayflower Wind, a joint venture of Shell and EDPR, paid $135 million, and Vineyard Wind, a joint venture of Copenhagen Infrastructure Partners and Avangrid Renewables, paid $135.1 million. This set a new record for U.S. offshore wind lease auctions.

Further, French utility giant EDF, in a joint venture with Shell, also bought US Wind’s lease rights in New Jersey for an undisclosed amount in the fourth quarter of 2018. The U.S. offshore wind sector is experiencing significant investments from major oil and gas companies and European utilities.

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