Maryland offshore wind sites auctioned

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The U.S. Bureau of Ocean Energy Management has sold the rights to lease sites for offshore wind projects in federal waters off Maryland to US Wind Inc. for $8.7 million.

A lighthouse on an island in the Atlantic Ocean, off Maine.


Part of the Obama administration's "Smart from the Start" offshore wind leasing program, yesterday's auction covered the rights to lease nearly 80,000 acres of the outer continental shelf.  The Maryland Wind Energy Area ranges seaward from about 10 nautical miles offshore Ocean City.  According to Department of Energy’s National Renewable Energy Laboratory, the area could support between 850 and 1450 megawatts of commercial wind generation.

The Maryland auction drew three bidders: US Wind Inc., Green Sail Energy LLC and SCS Maryland Energy LLC.  After 19 rounds, BOEM declared US Wind Inc. the provisional winner.  US Wind Inc. is a subsidiary of Italian firm Toto SpA's Renexia group. 

While winning the auction is an important first step in leasing federal ocean sites for offshore wind projects, the process will likely continue to play out for several years.  Following the auction results, US Wind Inc. will have one year within which to submit a Site Assessment Plan to BOEM for approval.  In the Site Assessment Plan, the lessee must describe what it intends to do to assess of the wind resources and ocean conditions of its commercial lease area -- for example, installing meteorological towers and buoys.  If that plan is approved, the lessee will then have up to 4½ years in which to submit a Construction and Operations Plan providing more detailed information for the construction and operation of a wind energy project on the lease.  The filing of that plan triggers further public comment and environmental review; if approved, BOEM will then issue a lease with an operations term of 25 years.  Notably, these leases generally require the lessee to pay ongoing rents; placing the winning bid in the auction conveys the right to pay that rent, but paying that bid does not count towards the lease payment obligation.

Moreover, this entire leasing process is just one of several aspects of the project that must move forward in parallel.  At the same time, US Wind Inc. is likely considering engineering issues such as turbine selection and interconnection design as well as how to finance the project.

Will federal waters offshore Maryland soon become home to an offshore wind project?

Topics:  Auction, BOEM, Commercial Leases, Offshore Wind

Published In: Energy & Utilities Updates, Environmental Updates, Government Contracting Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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