Offshore Wind Development Moves Forward in the New York Bight
The New York Bight auction is made up of six leases containing an estimated 5.6 GW of bottom-fixed offshore wind capacity that can serve New York and New Jersey offshore wind requirements, amongst others. Till now, New York and New Jersey have secured a combined capacity of 8.1 GW from offshore wind developers from a target to install 16.5 GW of offshore wind by 2035.
On Wednesday, bidding started at $24,711 per square kilometer for all six leases, which translated to a total option payment of $49 million. By the end of the day and 21 rounds, the cumulative bids stood at over $1.5 billion. Bidding will continue Thursday. Three leases secured a bid over $900,000 per square kilometer, and a fourth lease was just under the $900,000 level. Two leases had bids of around $575,000 per square kilometer.
The last auctions by BOEM resulted in the Beacon Wind, Liberty Wind, and Mayflower Wind leases - signed for around a quarter-million dollars per gross square kilometer in 2019. The amount is effectively an option fee to develop the lease. Once a lease is secured and a developer has paid the lease fee, the developer pays an annual rental fee ($3/acre) until commercial operations begin, when an operational fee is paid based on a set formula.
The trend for inflated option payments for certain offshore wind acreage is common to recent offshore wind leasing in Europe, reflecting a higher level of interest and confidence in offshore wind projects. Higher front end payments by developers will translate to increased pressure on the supply chain to reduce prices as developers seek to maintain their margins.
https://www.marinelink.com/news/offshore-wind-development-moves-forward-494554
