Posted on August 16, 2024
Another company is set to lease an offshore wind area off Maryland’s coast after winning a federal auction Wednesday.
Equinor, a Norwegian energy firm, was provisionally awarded the lease Wednesday to an area in the Atlantic Ocean, alongside northern Ocean City and the Delaware beaches, according to the federal Bureau of Ocean Energy Management, which ran the auction.
Situated about 26 miles from the mouth of the Delaware Bay, the area is farther from shore than the two current wind farm projects planned for the Maryland and Delaware coastline, from developers U.S. Wind and Ørsted.
Equinor’s portfolio includes oil and gas projects, but it has also invested in offshore wind and renewable energy, and has pledged carbon neutrality by 2050.
The company operates a pair of U.K. wind farms, called Sheringham Shoal and Dudgeon, and brought its first turbine online in December at a third, which will be the world’s largest upon completion, according to Equinor. The company also operates the world’s largest floating wind farm, Hywind Tampen, on the Norwegian shelf.
Equinor already leases offshore wind areas off the coast of New York (Empire Wind) and California (Atlas Wind), as it makes a foray into the U.S. market.
“What Maryland is getting is not only an experienced international developer, but one who’s been in the U.S. market for a while now, and understands how to work with locals, local manufacturing, state government, et cetera,” said Sam Salustro, vice president of strategic communications at the Oceantic Network, an offshore wind trade organization of which Equinor is a member.
In a statement to The Baltimore Sun, an Equinor spokesperson said the lease area is “a long-term opportunity in an attractive region,” with plenty of demand for renewable energy.
“It comes with offtake opportunities across several mid-Atlantic states that have high energy demand and that have demonstrated significant support for offshore wind and renewable energy projects,” wrote Equinor spokesperson Magnus Frantzen Eidsvold in a statement.
BOEM also leased an area off the coast of Virginia at the same time Wednesday, which went to Virginia Electric and Power Co. — the only bidder — for $17.6 million. A subsidiary of Dominion Power, the company is already developing an adjacent wind farm called Coastal Virginia Offshore Wind.
Maryland Gov. Wes Moore has vocally backed ambitious offshore wind goals for the state. In June, Moore signed a memorandum of understanding with the U.S. Department of the Interior, committing to secure more offshore wind areas for Maryland. Moore’s goal is for 8.5 gigawatts of wind power for Maryland by 2031.
“Gov. Moore has been already a champion of offshore wind in his short time in office. He’s risen the bar in Maryland. He’s worked hard at attracting investments and building up a workforce. And it was very much a signal from the industry that they want to be here,” Salustro said of Wednesday’s auction.
In a statement Thursday, Maryland Energy Administration Director Paul G. Pinsky said securing the new area offshore of Maryland was a “major priority” for the governor and his administration.
“Yesterday’s offshore wind energy lease auction is a decisive stride forward that will advance clean energy production, create new jobs, and work against climate change,” Pinsky wrote in a statement.
Businesses deciding to operate turbine manufacturing and other key operations in Baltimore’s Sparrows Point, and the recent announcement of a cable plant in Baltimore’s Wagner’s Point have continued to bolster the industry in Maryland, Salustro said.
But the projects have also faced backlash from some leaders and residents in Ocean City, who are adamant that the turbines will be an eyesore interrupting ocean views, and could deter tourism.
Leaders such as U.S. Rep. Andy Harris, a Republican whose district includes the resort town, have sought to link periodic whale deaths in the mid-Atlantic to the wind farms under development. But federal officials from the National Oceanic and Atmospheric Administration have said there is no connection between the multiyear whale mortality event and wind farm activity, and that ship strikes and fishing gear entanglements seem to pose a greater threat.
Initially, four other companies entered the fray Wednesday to win the right to the site, with the opening bid at about $10 million. The price climbed for several rounds of bidding, and Equinor emerged on top, with a bid of about $75 million, according to BOEM.
The area comprises 101,443 acres, and could produce an estimated 2 gigawatts of wind energy, enough to power about 900,000 U.S. homes.
“Despite the fact that we’re going through a period of uncertainty in the market — you know, they’re holding this just a couple months before the presidential election — this was a real vote of confidence in the U.S. market, to have such a robust auction,” Salustro said.
The auction price paled in comparison with some previous East Coast auctions, including one in New York about four years ago, Salustro said. But coronavirus-era supply chain issues have hampered the industry, and slowed some projects. The reduced auction cost has an upside, Salustro said, in that there is less cost that will be passed from the wind farm developer to its eventual ratepayers.
Now that the auction is complete, the Department of Justice will have up to 30 calendar days to conduct an antitrust review, BOEM spokesperson Brian Walch told The Sun. With the result confirmed, Equinor has the exclusive right to submit a wind proposal to BOEM. The lease doesn’t give Equinor the right to construct turbines, Walch said.
Wednesday’s sale, the fifth during President Joe Biden’s administration, also generated about $23 million in bidding credits, which developers can put toward workforce development and fisheries mitigation payments,instead of paying the federal government.
Last summer, the federal government had also announced another area, about 23.5 nautical miles off Ocean City, for possible lease, but the site (called B-1) was excluded from Wednesday’s sale after BOEM cited “the significant costs and mitigation that would be required.”
BOEM is preparing a possible next auction for the Central Atlantic region, which includes Maryland waters, in 2026, Walch said.
The projects from U.S. Wind and Ørsted have been under development for about a decade, but neither company has begun placing turbines in the water, with a complex regulatory process required before construction can begin.
Last month, U.S. Wind received a final environmental impact statement after a lengthy federal government evaluation, placing it close to the starting line.
“We are well on our way to putting Maryland’s offshore wind goals that much closer to reality,” said Jeff Grybowski, US Wind CEO. “We are now one step closer to securing all of our federal permits by the end of this year, and look forward to the day we can get steel in the water.”
Grybowski said previously that the company aims to begin construction sometime in 2025.
Ørsted, which is behind U.S. Wind, said in January that it was formally withdrawing from its power purchase agreement with Maryland, because of its outdated terms, though it would continue developing its wind farm.
