Deepwater Wind slams offshore auction process

UNITED STATES: Offshore developer Deepwater Wind has hit out at the auction process for offshore leases on the Atlantic coast, and has described the proposed auction process as "fatally flawed".

The Virginia wind energy area is included in the sales notices issued by the Bureau of Ocean Energy Management (BOEM) in December. Several developers, politicians and advocacy groups have raised concerns about the financial viability and potential environmental impacts of the lease auctions.

They filed comments in response to the proposed sales notices for the Virginia and Rhode Island/Massachusetts wind energy areas, published by the BOEM in December.

Deepwater Wind said the auction model leaves little room for state governments to participate, even though they control the most difficult aspect of wind farm development: approval for power purchase agreements (PPAs).

The proposed auction method requires developers to pay large up-front fees, Deepwater said, followed by site assessments and annual rent for those that win leases. No developer will be able to pay these costs, because none of the proposed projects has a PPA, Deepwater argued.

In its comment, Fishermen’s Energy said the auction lots are too large, which risks preventing development or creating a higher electricity price than would prevail in a more competitive market. It criticised the proposed operating fee structure for introducing financial difficulties and undue risk. It also said the proposed timeline is too tight.

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