The first US offshore wind auction in the Gulf of Mexico was a dud

There was only one bid in the first-ever US offshore wind auction in the Gulf of Mexico today – here’s why it was a bit of a washout.

The three lease areas off Texas and Louisiana that the Bureau of Ocean Energy Management (BOEM) auctioned today have the potential to generate around 3.7 gigawatts (GW) of clean power for almost 1.3 million households – but only one lease area had a single bid.

Germany’s RWE, one of the world’s largest offshore wind developers, won the rights to the 102,480-acre Lake Charles, Louisiana, offshore wind lease area with a winning bid of $5.6 million. The BOEM says that the Lake Charles lease area has the potential to generate 1.24 GW of offshore wind energy capacity and power nearly 435,400 homes with renewable energy.

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The Lake Charles lease area is 44 miles off the Louisiana coast, and it has water depths of 33-82 feet (10-25 meters). RWE’s project is expected to be in operation by the mid-2030s, contingent upon permitting timelines.

Sam Eaton, CEO of RWE Offshore Wind Holdings, said in a statement emailed to Electrek that RWE bid in the Gulf of Mexico offshore wind auction because it’s an opportunity to “enter the Gulf’s offshore wind industry at the ground floor to continue to work with partners to help shape this nascent market.”

Eaton added that “the region is well positioned to bolster its skilled energy workforce and world-class supply chain to unlock a new economic engine.” The state of Louisiana has set a goal to install 5 GW of offshore wind by 2035, and it also has existing coastal port and supply chain infrastructure.

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However, none of the 15 companies that qualified to bid in the Gulf of Mexico auction offered on Galveston I and Galveston II off Texas.

The Southeast has low power prices, and Texas doesn’t have state policy that supports offshore wind development. In fact, some lawmakers are downright hostile:

Biden’s wind boondoggle puts nearly $900 Billion of ship channels economic impact at risk and will destroy grid frequency in our grid. They made a bad plan worse by moving it closer to Galveston Island. That’s why I’m going to re-file the bill to stop it

— Mayes Middleton (@mayes_middleton) July 27, 2023

Nor is Texas entertaining any plans to require utilities to buy power from offshore wind. And at a time when several planned offshore wind farms in the Northeast, for example, are being challenged by rising cost inflation, state support is vital.

In response to today’s auction, Liz Burdock, president and CEO of the Business Network for Offshore Wind, said:

Today’s auction results show the important role state public policy plays in offshore wind market development.

The Network remains fully committed to offshore wind in the Gulf and to supporting our members forming the robust supply chain that is already instrumental to building out a new American energy industry. 

Read more: Despite headwinds, offshore wind will see ‘massive’ growth to 2032 – report

Photo and map: RWE

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