Bud's Offshore Energy (BOE)

California offshore wind sale: 5 leases, $757.1 million in high bids

The California wind sale bidding, while lower than the record Atlantic sale in February, was extraordinary given that the 5 leases are relatively distant from shore (20+ miles) and in water depths (537 to 1284 m) that dictate the use of floating turbines. Generous subsidies, credits, and State mandates no doubt contributed to the seemingly inflated bidding, as did an auction system that is designed to maximize bonus payments.

Given the slow progress in US offshore wind development, the setbacks the industry is experiencing, the added challenges associated with commercial deepwater development, the potential cost burden on taxpayers and power customers, and the government’s financial and policy support, a more development-friendly leasing system would seem to be prudent. BOEM took a step in that direction with the with the limited training and supply chain credits provided for in the Sale Notice, but fundamental changes in the auction system may be desirable.