First Offshore Wind Auction in Gulf of Mexico by US

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by KnowESG
KnowESG_First Offshore Wind Auction in Gulf of Mexico by US
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In a groundbreaking move, the Biden administration initiated the first auction of offshore wind development rights in the Gulf of Mexico on August 29th.

This expansion of focus from traditional oil and gas to the emerging clean energy sector represents a significant step towards combating climate change driven by fossil fuels.

This auction marks a pivotal achievement in President Joe Biden’s vision to position offshore wind as a central element in his strategy to counter the impacts of fossil fuel-induced climate change.

The Department of the Interior auctions off a lease area spanning 102,480 acres off the Lake Charles coast in Louisiana, along with two additional areas covering nearly 200,000 acres off Galveston, Texas.

Fifteen companies participated in the auction, including offshore wind subsidiaries of European energy giants Equinor, Shell, RWE, and TotalEnergies.

These firms have already engaged in the development of US offshore wind leases in other regions, with Equinor and Shell also holding stakes in oil and gas operations within the Gulf.

Joining this roster of established players are newer entrants like divisions of South Korea’s Hanwha, US renewable energy developer Hecate Energy, and Houston-based private equity firm Quantum Capital.

The areas on the auction block possess the potential to generate approximately 3.7 gigawatts of power, thus potentially providing clean energy to nearly 1.3 million households, according to estimates from the Interior.

Nevertheless, developers are setting their sights beyond the Gulf's power grid, envisioning the auction as a possible catalyst for fueling a green hydrogen supply chain catering to the region's extensive industrial corridor.

The Gulf region presents distinct challenges for the industry, such as lower wind speeds, soft soils, and the threat of hurricanes. Moreover, the southeastern area's low power prices could potentially pose a challenge for offshore wind generation, which tends to have higher costs as it competes for electricity contracts.

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Source: Reuters

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