Tomorrow will mark the first lease sale for offshore wind power off North Carolina’s coast. We thought it may be useful to explain what this means and what the process looks like going forward for offshore wind in North Carolina and the Southeast. Below, we will discuss some of the basics about the lease sale, including what exactly it is, where it will cover, what the winner of the lease will and won’t be able to do with the lease, and what comes next in the process. We hope you find this a helpful guide.
Who offers the lease?
The lease is offered by the Bureau of Ocean Energy Management (BOEM), which is the federal agency, under the Department of Interior, tasked with regulating offshore energy development and marine mineral extraction (primarily sand and gravel) in federal waters (waters farther than 3 miles offshore).
What is an offshore wind lease sale?
An offshore wind lease sale is an auction to lease an area offshore to a company seeking to explore that area to assess the suitability for eventually developing an offshore wind farm there. A company must have a lease to conduct site assessment activities, such as deploying a buoy or building a tower to host meteorological data gathering equipment. Nine companies have expressed interest in bidding on the Kitty Hawk lease (although one has since said they are no longer interested).
Where is the lease being offered?
The lease will be for just one of North Carolina’s three offshore wind energy areas–the area known as the Kitty Hawk Wind Energy Area (WEA). The area lies to the east of the Currituck Sound, at about 24 nautical miles from shore at its closest point, and consists of about 122,405 acres. The Kitty Hawk WEA was identified as an area potentially suitable for wind development by a stakeholder process that spanned more than four years. Through the scoping process, the Kitty Hawk WEA was determined to be suitable for offshore wind when considered through the lenses of: archaeological/cultural sites, fisheries, historic properties, migratory species, Native American interests, navigation/maritime commerce, protected species (such as marine mammals, birds, sea turtles, and bats), sensitive offshore habitats, socioeconomic issues and environmental justice, recreation and tourism, viewshed, aviation, and national security.
How will the auction work?
The sale is held online utilizing an auction format. The sale will begin at 9:00 am tomorrow, and progress in rounds, with BOEM setting an asking price in each round. The first round’s asking price will be $244,810 and then BOEM will raise the asking price each round. Each participating company will either match the asking price with their bid in that round, or if they have reached the maximum of what they are willing to offer, they will submit their final exit bid. The rounds will continue until only one bidder is left, who will be the provisional winner of the lease. The lease sale will likely only last one day, but it could stretch into two. For example, in December, BOEM’s offshore wind lease auction for New York took two days, with 33 rounds, attracting six bidders.
What could the winner of the lease sale do with the lease?
Whichever company wins the lease sale will create a Site Assessment Plan (SAP), detailing how it will collect meteorological data (i.e. from a buoy or tower), to submit to the Bureau of Ocean Energy Management (BOEM) for environmental review. If the SAP is approved, then the lessee will conduct site assessments likely for several years, such as collecting wind data and information on wildlife. The data collected would help guide the company in crafting their Construction & Operations Plans (COP), which would be the proposal for the actual wind farm. Upon submission, the COP is then subject to review, environmental approval, and public comment before the final construction permit is approved. You can learn more about the offshore wind leasing process here.
What would the winner of the lease sale still NOT be able to do?
The winner of the lease would not be allowed to build a wind farm until several rounds of applications, permits, and public and environmental reviews take place, which will span several years. As this guide to BOEM’s leasing process states: “a lease does not grant the lessee the right to construct any facilities; rather, the lease grants the right to develop a plan for use of the area for BOEM’s review and potential approval — a Site Assessment Plan (SAP), Construction and Operations Plan (COP), or General Activities Plan (GAP). Activities proposed in a plan are subject to BOEM’s approval after thorough environmental and technical reviews are conducted.”
What about other offshore wind areas in North Carolina?
Through the aforementioned multi-year stakeholder engagement process, two other wind energy areas (WEAs) were identified for North Carolina–Wilmington West WEA and Wilmington East WEA. Since they abut South Carolina’s areas of interest for offshore wind, both of the Wilmington WEAs will be combined with an eventual South Carolina leasing process. South Carolina’s process of area identification and environmental review is about two years behind that of North Carolina, so further movement on the Wilmington WEAs is delayed until the South Carolina process catches up. Neither Georgia, nor Florida have formal BOEM Offshore Wind Intergovernmental Task Forces, thus their offshore wind processes would likely take significantly longer.