First Gulf of Mexico Offshore Wind Energy Auction Results in One Winning Bid

The U.S. Department of Interior’s first offshore wind auction in the Gulf of Mexico resulted in one lease area receiving a high bid of $5.6 million, according to an Aug. 29 press release. RWE, a company based in Germany, won the rights to a 102,480-acre Lake Charles, Louisiana that has the capacity to produce around 1.24 gigawatts (GW) of offshore wind energy and power approximately 435,400 homes. The auction involved three lease areas off Texas and Louisiana.

The sale offered three areas: a 102,480-acre area offshore Lake Charles, Louisiana, and two areas offshore Galveston, Texas, one comprising 102,480 acres and the other 96,786 acres. In announcing the sale last month, the department said that the areas have the potential to generate approximately 3.7 gigawatts and power almost 1.3 million homes. The move drew opposition from Texas Railroad Commissioner Wayne Christian, who wrote to Governor Greg Abbott and Land Commissioner Dawn Buckingham detailing “concerns with wind farms along the Atlantic Coast that likely will translate to the implementation of windmills along the Texas Gulf Coast” and suggested actions to halt installation.

The sale comes on the heels of federal approval of the fourth commercial-scale offshore wind project, a 704-megawatt wind farm to be built off the coast of Rhode Island. Even as projects approach permitting milestones, the U.S. offshore wind industry faces headwinds from mounting opposition and financial challenges. The industry is faced with a host of challenges including opposition over impacts to the environment and coastal economies, escalating costs, and delays. The first offshore wind energy auction in the Gulf of Mexico comes on the back of years of negotiation with government agencies, states, ocean users and other key stakeholders. The Biden administration has set a goal of deploying 30 gigawatts of offshore wind by 2030 and 15 gigawatts of floating offshore wind energy by 2035.

As part of the goal to achieve the nation’s goal, the department has permitted the country’s first four commercial scale offshore wind projects, held four offshore wind lease auctions, started environmental appraisal of 10 offshore wind developments and developed the procedure to explore Wind Energy Areas in Oregon, Gulf of Maine and Central Atlantic. Moreover, the department has taken actions to advance its method to strive towards union built projects and a domestic supply chain.

RWE Offshore US Gulf earned a credit equivalent to 20 percent of the cash bid to buyers who intend to promote workforce training packages and establish a domestic supply chain for the offshore wind energy industry. Moreover, a credit equating to 10 percent of the cash bid to buyers for creating and funding to a fisheries mitigation fund. These bidding credits incorporate more than $860,000 in funds for workforce training and a domestic supply chain, and around $430,000 for fisheries compensatory mitigation.