Wilmington East Wind Energy Area Leased For $315M

By Johanna F. Still, posted May 11, 2022
The Wilmington East Wind Energy Area, divided into two leases, was provisionally leased for $315 million Wednesday. (Photo courtesy of BOEM)

Rights to plan two wind farms off the coast of Southeastern North Carolina were provisionally awarded to two companies Wednesday, fetching $315 million in combined bids. 

The Bureau of Ocean Energy Management’s (BOEM) auction began Wednesday morning for two lease areas in the Wilmington East Wind Energy Area, totaling nearly 110,100 acres. With each area about 55,000 acres, the western lease provisionally sold for $160 million to TotalEnergies Renewables USA, LLC and the eastern lease went for $155 million to Duke Energy Renewables Wind, LLC. Lease awards will be finalized following regulatory review. 

First bids for Wilmington East came in at 9 a.m., drawing four separate companies for one of the leasing areas and five for the other. Bidders dwindled down by the afternoon, and after 18 rounds, wrapped up at 3:40 p.m. Participants were permitted to bid on both leases.

Wednesday’s outcome comes on the heels of the New York Bight auction, BOEM’s most lucrative offshore energy lease sale in history – including oil and gas. In that auction, six companies bid a combined $4.37 billion for the rights to plan wind farms off the coast of New York and New Jersey on more than 488,000 acres, at roughly $9,472 an acre. By comparison, Wilmington East lured $2,861 per acre.

The Wilmington East area presents the opportunity to power nearly 500,000 homes by generating 1.48 gigawatts of electricity, according to earlier BOEM estimates. In June 2021, Gov. Roy Cooper imposed an offshore wind goal of 2.8 gigawatts by 2030, and the N.C. Utilities Commission was tasked by separate legislation last year to come up with a plan to accomplish Cooper’s feat. This goal and plan still fall short of a legislative offshore wind mandate, which other states like New York and New Jersey have imposed that helped drive up the New York Bight bid price. 

Sixteen bidders were pre-qualified by BOEM to participate. BOEM has not publicly disclosed which companies chose to participate in the auction. Before BOEM published its final sale notice in March, several of the pre-qualified bidders, including Duke Energy, BP, Equinor Ørsted and more weighed in on the Wilmington East leasing arrangement

Duke Energy is the most likely purchaser of power generated by the offshore wind areas, which begin about 17 nautical miles from the shore of Bald Head Island. “Securing this lease creates optionality for future offshore wind if the North Carolina Utilities Commission determines it’s part of the least cost path to achieve 70% carbon reduction by 2030 and net-zero by 2050,” Stephen De May, Duke Energy’s North Carolina president, said in a statement. “As we continue to assess the area and project potential, we look forward to listening and learning from diverse stakeholders and community members in the region to ensure we are being thoughtful about all aspects of the potential project.”

The auction marks North Carolina’s third leased offshore wind area, behind Kitty Hawk, which sold to Avangrid Renewables in 2017. The company picked up 122,405 acres off the Northeastern North Carolina coastline for about $9 million, at $74 an acre. 

This auction included BOEM’s first option for bidders to receive a 20% credit of its cash bid in exchange for committing to financial contributions for workforce or supply chain development initiatives. The credit will result in $42 million for these programs, BOEM shared in a release.

“This auction puts real dollars on the table to support economic growth from offshore wind energy development – including the jobs that come with it,” BOEM director Amanda Lefton said in a release. “The new bidding credit in the Carolina Long Bay auction will result in tangible investments for workforce training and businesses in the United States, to ultimately create jobs in the U.S. across the industries needed to support achieving our offshore wind goals.”

National Ocean Industries Association president Erik Milito said the offshore wind market is maturing and stakeholders hold an optimistic outlook for areas outside of the Northeast, where activity has concentrated thus far. "With three separate wind projects now in the area, and potentially more on the way, the Carolinas are positioned to be the next American offshore wind hub,” he said in a statement. “The high-level of interest in the lease areas underscores demand for additional future wind lease opportunities.”

The Wilmington East auction in BOEM’s Carolina Long Bay area took place right in time: With the leasing complete, Wilmington East’s future development should not be impacted by the looming offshore wind moratorium that affects several eastern states beginning July 1. 

Imposed by President Donald Trump in 2020, the moratorium bans all new offshore leasing activity (including oil and gas) through 2023 from North Carolina to the Florida Keys. Though there are bipartisan efforts to override the moratorium (including language in the since-scrapped Build Back Better plan), nothing has yet passed. Stakeholders believe it would take Congressional action to remove the ban. 

Wednesday, U.S. Rep. Deborah Ross (D-N.C.) co-signed a bicameral letter asking to repeal the moratorium, and U.S. Rep. David Rouzer (R-N.C.) has likewise previously advocated to drop the ban. 

It could take up to eight years between the auction and installation, per BOEM estimates. After the lease is finalized, the lessee must submit a site assessment plan and a construction and operations plan, which each must be approved by BOEM.

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