US proposes second offshore wind auction in Gulf of Mexico

By Thomson Reuters Mar 20, 2024 | 1:28 PM

(Reuters) – The Biden administration on Wednesday proposed a second sale of offshore wind development rights in the Gulf of Mexico as soon as this year, despite lackluster interest in the region at an auction seven months ago.

The Interior Department plans to offer four areas, a total of 410,060 acres, off the coasts of Louisiana and Texas and will accept public comments on the proposal for 60 days before deciding whether to proceed with the auction.

If developed, the areas have the potential to power 1.2 million homes, the agency said.

The announcement underscores the administration’s determination to support the nascent U.S. offshore wind industry as part of President Joe Biden’s climate change agenda.

In the last year the industry has been plagued by rising costs tied to inflation, interest rates and supply chain constraints, forcing companies to write down assets and exit some projects.

Interior has held a string of offshore wind auctions since 2022 for areas off the coasts of New York and New Jersey, the Carolinas and California that each brought in between $315 million and $4.4 billion in high bids.

But a sale of three areas in the Gulf of Mexico last August attracted meager interest, with two of the leases receiving no bids at all. The third lease for an area off Louisiana sold for just $5.6 million.

The Gulf’s lower wind speeds, soft soils and hurricanes are considered challenges to the industry. The southeastern U.S. also has low power prices that could make it harder for higher-cost offshore wind to compete for electricity contracts.

(Reporting by Nichola Groom in Los Angeles; Editing by Nia Williams)