After a lengthy process to identify potential offshore wind energy areas that originated in 2022, on June 28, 2024, the U.S. Department of the Interior announced the auction date for two offshore wind lease areas:
- Area offshore Delaware and Maryland – Lease Area A-2 consists of 101,443 acres and is approximately 26 nautical miles from Delaware Bay.
- Area offshore Virginia – Lease Area C-1 consists of 176,505 acres and is approximately 35 nautical miles from the mouth of the Chesapeake Bay.
The Bureau of Ocean Energy Management (BOEM) will hold the auction on Aug. 14, 2024. The available sites together could generate up to 6.3 gigawatts of renewable energy, power millions of homes and create thousands of jobs. Seventeen companies qualified to participate in the sale. Prior to the auction, each bidder will need to submit a bidder financial form and pay a bid deposit.
The final sale notice containing information about the areas available for leasing, certain lease provisions and auction procedures and details was published in the July 1, 2024, Federal Register. BOEM has included credits to help bidders in the auction process, including:
- A 12.5% bidding credit to bidders who commit to supporting workforce training programs for the offshore wind industry, developing a domestic supply chain for the offshore wind industry or a combination of both;
- A 12.5% bidding credit to bidders who establish and contribute to a fisheries compensatory mitigation fund or to an existing fund to mitigate potential negative impacts from offshore wind energy development in the Central Atlantic to commercial and for-hire recreational fisheries; and
- Stipulations similar to prior leases, including that lessees make every reasonable effort to enter into a project labor agreement covering the construction stage of any project for the lease areas; communication plans for tribes, agencies and fisheries; semi-annual reports on engagement activities with tribes and communities; protection of national defense capabilities and military operations; consideration of shared cable corridors and regional transmission systems; and potential future restrictions based on conflicts with the Department of Defense activities.
Despite recent challenges on the East Coast posed by higher interest rates and supply chain issues, the upcoming sale continues the strong development of offshore wind energy projects, especially in Virginia, already an industry leader. Lease Area C-1 sits next to 2.6 GW Coastal Virginia Offshore Wind project, now under construction.
McGuireWoods assists clients with all aspects of renewable energy projects, including offshore wind leasing, BOEM regulations, construction and procurement contracts, project finance, corporate formation and structuring, energy asset purchases and sales, joint venture arrangements, negotiation of power marketing agreements, energy regulation before FERC and state regulators, transmission projects, and licensing and permitting matters. For further information on this alert or related renewable energy matters, please contact the authors.
The authors thank legal intern Joshua Chilmaid who contributed to the alert. He is not licensed to practice law.