February 6, 2023
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Morro Bay wind farm leases announced

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The U.S. Department of the Interior has announced the provisional winners of an auction of floating offshore wind farm leases along the coast of Morro Bay and Humboldt County in Northern California, with bids totalling $757.1 million.

It was the first such sale along the Pacific coast and the third major offshore wind lease sale in 2022. The proceeds well exceeded previous wind lease sales along the nation’s Atlantic coast n earlier this year, according to the Department.

The auction began 7 a.m. PST Dec. 6 and the results were announced the next day.

The auction covered about 373,000 acres off the coast of Humboldt County in Northern California and Morro Bay on the Central Coast.

Three of the five leases are off the coast of Morro Bay. In total, 43 companies were in the running. 

The sale represents a significant milestone toward achieving President Biden’s goal of deploying 30 gigawatts of offshore wind energy capacity by 2030 and 15 gigawatts of floating offshore wind capacity by 2035, the Interior Department said.

The Bureau of Ocean Energy Management, which oversaw the lease auction, projects the sale has the potential to produce over 4.5 gigawatts of offshore wind energy, enough to power more than 1.5 million homes, and will support thousands of new jobs.

The five provisional winners are: RWE Offshore Wind Holdings which paid $157.7 million for 63,338 acres; California North Floating which paid $173.8 million for 69,031 acres; Equinor Wind U.S. which paid $130 million for 80,062 acres; Central California Offshore Wind which paid $150.3 million for 80,418 acres and Invenergy California Offshore which paid $145.5 millon for 80,418 acres.

The three Morro Bay leases totaled $425.6 million in proceeds. 

Local politicians were excited about the lease sale, such as Congressman Salud Carbajal, D-Santa Barbara, who said he has been a supporter of clean wind energy projects “for years.”

“This week’s auction, which drew three quarters of a billion dollars in interest from the private sector, proves that wind can and will be an economic powerhouse for the Central Coast,” Carbajal said in a press release. 

“These leases off Morro Bay will help secure the Central Coast’s dominance as a renewable energy hub for years to come—attracting new businesses and creating good-paying jobs—and I look forward to working with the lease purchasers, as well as local, state, and federal partners, to make these offshore wind projects a reality in the years ahead.”

Provisional winners are going to be held to BOEM’s lease standards, which include working closely with local governments, commercial fishers, tribes and others impacted by the proposed developments to identify ways to minimize detrimental impacts.

The companies will also be paying a $3 per acre per year tax for their ocean space until it begins producing electricity.

Companies also have up to one year to submit a site assessment plan outlining how to assess the lease area to build wind turbines.

Then, companies will have up to five years to submit a construction and operations plan outlining how they will develop and maintain the ocean space.

The goal is to have floating offshore wind up and running by 2030, the same year the Diablo Canyon Power Plant will be going offline, barring another extension.

The lease sale also included bidding credits, which means a certain percentage of their total winning bid would be discounted. 

Up to 20% of the total winning bid could be discounted if the company shows an established plan for workforce development, supply chain development and other requirements. 

This credit will result in over $117 million in investments for these critical programs or initiatives, the DOI said.

The auction also included 5% credits for bidders who committed to entering community benefit agreements.

According to the DOI, the first type of agreement is a Lease Area Use CBA with communities, stakeholder groups, or Tribal entities whose use of the lease areas or use of the resources harvested from the lease areas is expected to be impacted by offshore wind development. 

The second type of agreement is a General CBA with communities, Tribes, or stakeholder groups that are expected to be affected by the potential impacts on the marine, coastal or human environment from lease development.

“The Biden-Harris administration believes that to address the climate crisis head on, we must unleash a new era of clean, reliable energy that serves every household in America. Today’s lease sale is further proof that industry momentum – including for floating offshore wind development – is undeniable,” said Secretary Deb Haaland in a press release. 

“A sustainable, clean energy future is within our grasp and the Interior Department is doing everything we can to ensure that American communities nationwide benefit.”