Semafor: “The U.S. held its first auction for leases to build offshore wind farms in the Gulf of Mexico, and all it heard was crickets.
The Interior Department pitched three new lease areas on Tuesday, two off the Texas coast and one off Louisiana, following a dozen increasingly competitive offshore wind auctions last year. Despite high hopes from clean energy advocates that the auction could herald a pivot for the heartland of the U.S. fossil fuel industry, in the end, there were zero bids for the Texas leases. Louisiana’s, meanwhile, went to a subsidiary of German energy company RWE for an underwhelming $13,500 per square kilometer: Leases sold last year in New York, North Carolina, and California went for an average of $1.4 million per square kilometer….
The lackluster auction turnout shows that the U.S. offshore wind industry still needs government support to scale up, and that the region’s oil and gas companies aren’t as ready to dive into clean energy as many had hoped.
There are a few problems with the Gulf as a venue for offshore wind. Wind speeds are normally low, requiring larger and more efficient turbines to produce a profitable volume of electricity. And occasionally, wind speeds are far too high: Hurricanes routinely disable the region’s offshore oil platforms. The region’s seafloor is also notoriously soft and silty, raising the cost of fixing turbines in place. As a result, a federal analysis projected that the price to produce power from offshore wind from the Gulf will be between $125-150 per megawatt-hour in most cases by 2027, double the national offshore wind average.
That’s especially a problem because Texas and Louisiana already have some of the country’s cheapest electricity, evaporating any potential competitive edge for offshore wind.
New York, Massachusetts, and other states with burgeoning offshore wind industries also have cost problems. But their offshore wind lease prices are much higher than the Gulf’s because most of those states have offshore wind purchasing mandates for their utilities, effectively guaranteeing the market. Louisiana has an offshore wind installation target — five gigawatts by 2035, which the area auctioned this week could cover about 20% of — but no purchasing mandate. Texas has neither (Republican lawmakers in the state have called offshore wind a “boondoggle”).
Since offshore wind isn’t competitive on Gulf-area electric grids, some industry advocates see the local oil and gas industry as an alternative customer.”