Subsidiaries of Equinor and Dominion Energy were the preliminary winners of the U.S. offshore wind lease auction on August 14, raising nearly $93 million for two leases in the Mid-Atlantic.

The lease sale, which gives the companies the right to submit plans for offshore wind projects off the coasts of Delaware, Maryland and Virginia, was the first sale in the region in a decade, according to the U.S. Bureau of Ocean Energy Management (BOEM). Together, the leases have the potential to provide clean energy for up to 2.2 million homes, according to BOEM estimates. This would require up to 6.3 gigawatts (GW) of wind energy.

“At the beginning of the (Biden) administration, our country had approved zero offshore wind projects. Today we have nine – enough to power nearly 5 million homes,” said U.S. Secretary of the Interior Deb Haaland. “This is what the evolution of a clean energy transition looks like.”

The sale represents another milestone toward the Biden-Harris administration’s goal of deploying 30 GW of offshore wind capacity by 2030. To date, the U.S. has approved offshore wind projects totaling more than 13 GW.

Offshore wind is seen as a key factor in the administration’s plans to add more renewable energy to the U.S. power grid to reduce greenhouse gas emissions. After a difficult 2023 – marked by high interest rates, supply chain issues and inflation that led to some project delays and cancellations – offshore wind developers are moving forward with their projects with support from regulators.

However, the recent lease sale attracted lower bids compared to other offshore wind power sales.

At the auction for six offshore wind leases in the New York Bight in February 2022, six companies competed to win, bidding a total of nearly $4.4 billion. That same year, the sale of two offshore wind leases in Carolina Long Bay brought in a total of $315 million. Last year, the first auction of offshore leases in the Gulf of Mexico saw only one successful bid, for $5.6 billion.

Of the 17 companies eligible to bid at the August 14 auction, six companies participated.

Equinor Wind US LLC was named the preliminary winner of the OCS-A 0557 lease with a bid of approximately $75 million. The lease, which covers more than 101,000 acres and is located approximately 26 nautical miles (nm) from Delaware Bay, attracted the most interest among the companies participating in the tender.

With a bid of approximately $17.7 million, Dominion Energy’s Virginia Electric and Power Co. has provisionally won lease OCS-A 0558. The 176,505-acre lease is located approximately 35 nautical miles from the entrance to the Chesapeake Bay.

Next Steps

Equinor said it will work with BOEM to certify the lease, which potentially has about 2 GW of energy production capacity. The company plans to add the ground-fixed wind lease to its portfolio following regulatory approval.

“This is a long-term option with first power generation after 2035. The development of this lease will build on Equinor’s proven capabilities in offshore wind,” said Pål Eitrheim, Executive Vice President of Equinor Renewables, in a press release. “We will take a disciplined approach to minimise risk and develop a robust project in our portfolio.”

Elsewhere in the US, Equinor is developing the two-part 2.1 GW Empire Wind project off the coast of New York, as well as the South Brooklyn Marine Terminal, which will become New York’s first offshore wind farm. Once completed, Empire Wind will have up to 130 wind turbines and will be able to produce enough electricity to power 1 million New York homes.

The Central Atlantic lease won by Dominion Energy’s Virginia Electric and Power Co. positions the company for further growth off the Virginia coast. The lease, which BOEM says has a potential capacity of between 2.1 and 4 GW, is adjacent to the site of Dominion’s 2.6 GW Coastal Virginia offshore wind project currently under construction. The company has also agreed to acquire Avangrid’s nearby 40,000-acre Kitty Hawk Wind North project, which it plans to rename CVOW South.

“Offshore wind energy is critical to our comprehensive approach to meeting the unprecedented increase in our customers’ electricity needs over the next decade,” said Robert M. Blue, CEO of Dominion Energy. “Winning this lease gives us another cost-effective way to meet this growing need while providing our customers with reliable, affordable and increasingly clean energy.”

Despite this progress, more needs to be done to maintain momentum, according to Erik Milito, president of the National Ocean Industries Association. In a statement released after the offshore wind farm sale on August 14, Milito noted that the Interior Department cannot allow any more offshore wind farm lease sales after December until another offshore oil and gas sale occurs.

No sales of offshore oil and gas leases are planned for 2024.

“This will be the first year since 1958 that there will be no federal sale of offshore oil and gas leases. … The current lease reality cries out for a solution from Congress to provide much-needed regulatory certainty and normalcy for the sale of offshore oil and gas and wind leases,” Milito said.