A group led by two American companies shelled out $645 million last week for the future development rights of an offshore wind farm off the New Jersey coast.
Invenergy Wind Offshore LLC, which is a partnership led by Chicago-based Invenergy and New York-based energyRe, now owns the rights to 84,000 acres where company officials believe 2,000 megawatts of renewable energy can be harnessed using turbines larger than the Washington Monument.
"We’re very happy where we are, and it's a huge opportunity for our two American companies to really shine," energyRe Chairman Jeff Blau said in an interview Thursday.
Despite the Invenergy group's win, the federal auction proved that European energy giants still dominate the burgeoning offshore wind industry. The other five leases up for auction were grabbed by companies based in Spain, Great Britain, France and Germany. (One of those five does include a New York investment firm.) In total, the six leases raised a whopping $4.4 billion for the federal government.
European energy companies already own most of the 17 leases awarded between 2013 and 2018. Industry experts say those foreign conglomerates have head starts from their decades of experience building wind farms in Europe. Most are former fossil fuel companies that years ago began renewable energy subsidiaries.
What's at stake is immense, and getting more so. The size of the six ocean parcels awarded in the three-day auction is 762 square miles, which is equivalent to the combined size of Philadelphia, New York City, Boston and Chicago.
That adds to the 2,722 square miles of Atlantic Ocean real estate -- larger than the state of Delaware -- already leased out off the East Coast from North Carolina to Massachusetts.
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President Joe Biden and several Atlantic coast states are counting on offshore wind energy to replace at least 30 gigawatts of fossil fuel energy by 2030. That's enough power for 10 million American homes.
Blau said he hopes the federal government will change the way it runs future auctions for ocean leases because the current rules favor the Europeans, who have billions to spend and the confidence to shell out the money because of their experience in building wind farms for the last two decades.
"We do think maybe the government needs to rethink how these auctions are done, so we can have more American companies brought into the fold," Blau said. "There are many auctions where it becomes more than just price. Price may be 70% of the decision, 20% maybe expertise and experience, and 10% is country of origin. If you’re trying to push more American companies, that would be the better way to do these auctions."
energyRe's founding investors include principals at The Related Companies, a private American real estate empire. When asked if the company is going to continue looking for opportunities in offshore wind and renewable energy, Blau said, "We’re just getting started."
Here is a look at the six entities that bought leases to ocean tracts, the companies behind them, and the amount they paid.
OW Ocean Winds East, LLC
PRICE PAID: $765,000,000
SIZE: 71,522 acres (112 square miles)
This is a partnership between Ocean Winds, an international offshore wind energy company created by Spain-based EDP Renewables and France-based ENGIE, and a New York-based fund manager, Global Infrastructure Partners.
This is the second offshore wind farm in North America planned by Ocean Winds, which already has a development in the works for 127,000 acres off the coast of Massachusetts. The first phase of that project, called Mayflower Wind, is expected to provide about 2 gigawatts of energy from more than 80 turbines.
Attentive Energy LLC
PRICE PAID: $795,000,000
SIZE: 84,332 acres (132 square miles)
The entity is a subsidiary of TotalEnergies Renewables USA LLC. It's the first offshore wind development in the United States by a France-based oil and gas company called TotalEnergies.
“Attentive Energy’s successful lease award in the New York Bight marks the entrance of TotalEnergies into the U.S. offshore wind market after a decade of activity in this country’s solar and energy storage spaces. We are proud to contribute to the ramp-up of the offshore wind industry here in the United States as part of our corporate goals of reaching 100 GW of renewable energy capacity by 2030 worldwide,” said David Foulon, Head of U.S. Offshore Wind at TotalEnergies in a statement last week.
Bight Wind Holdings, LLC
PRICE PAID: $1,100,000,000
SIZE: 125,964 acres (197 square miles)
Bight Wind is a subsidiary of RWE Renewables, which in turn is part of Germany-based energy giant RWE. Like TotalEnergies, the winning bid by RWE for the largest ocean tract up for auction this year is the first offshore wind development in the United States for the German power company.
RWE has less experience in offshore wind development than other multinational power companies based in Europe that have leased ocean off of the United States in the past decade. But this 126,000-acre tract has the potential for up to 3 gigawatts of renewable energy production, enough to power more than a million American homes.
"Winning a lease in the New York auction is a significant move for us as it marks RWE's entry into the U.S. offshore wind market, one of our key strategic markets," Sven Utermöhlen, CEO Offshore Wind of RWE Renewables, said in a statement. Our success in this auction means an important step on the road to tripling our offshore wind capacity to 8 gigawatts by 2030, as part of our 'Growing Green' growth and investment programme. Now we're looking forward to developing our first offshore wind project in the U.S. and to contribute to the region's offshore build-out targets."
Atlantic Shores Offshore Wind Bight, LLC
PRICE PAID: $780,000,000
SIZE: 79,351 acres (124 square miles)
The entity is a subsidiary of Atlantic Shores Offshore Wind LLC, a partnership between two British power companies, Shell and EDF Energy. Atlantic Shores LLC already has the development rights to one of the largest ocean tracts off the U.S. coast. Its 183,000-acre tract off southern New Jersey has enough space to produce up to 2.3 gigawatts of energy.
In July, the New Jersey Board of Public Utilities approved Atlantic Shores' first phase of development on that tract. The BPU approved Atlantic Shores to build out about 110 turbines that will produce 1.5 gigawatts of power. That's enough for 700,000 homes, the company says. The project is now undergoing extensive federal permitting and environmental reviews. It is the largest single development approved by a state, and only the third overall.
Offshore Wind Farms: The Lease Areas and Developers
Seventeen federally leased areas are off the coasts of eight U.S. states, as of December 2021. Click on each lease site to see how many turbines are expected or estimated, to which developer they belong and how much power will be generated. Turbine totals are either based on developers’ proposals or estimated using power generated by the largest turbine currently on the market.
Data: Bureau of Ocean Energy Management
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“This New York Bight lease in combination with our existing portfolio of offshore energy projects solidifies Atlantic Shores’ position as a driving force to establish this new industry and deliver clean, renewable power while protecting our natural resources," said Joris Veldhoven, Commercial and Finance Director at Atlantic Shores Offshore Wind. "It also provides significant momentum for the Atlantic Shores domestic supply chain strategy and qualified workforce we are investing in, in line with our target to create thousands of good-paying jobs for years to come.”
Invenergy Wind Offshore LLC
PRICE PAID: $645,000,000
SIZE: 83,976 acres (131 square miles)
The entity is a partnership of several American companies and a Canadian pension fund, with two United States-based companies as leads: Invenergy, based in Chicago, and energyRe, which has offices in New York and Houston. Invenergy owns and operates energy and storage facilities across the world. EnergyRe's founding investors include principals of The Related Companies, a privately-owned American real estate empire. Blau, who is CEO of The Related Companies, said energyRe's leadership consists of former executives at Spain-based EDP Renewables.
“For more than twenty years, Invenergy has leveraged our deep technical expertise to lead the renewable energy transition in the United States and around the world,” Invenergy Founder and CEO Michael Polsky said in a statement. “The U.S. offshore market is the next frontier in the clean energy revolution, and we are proud to have the opportunity to increase American competitiveness in the global offshore market as we build a sustainable world.”
Mid-Atlantic Offshore Wind LLC
PRICE PAID: $285,000,000
SIZE: 43,056 acres (67 square miles)
Mid-Atlantic Offshore Wind LLC is also owned by Shell and EDF Energy, the two British power giants that own Atlantic Shores Offshore Wind, which one the rights to one of the other six tracts up for lease in the auction.
The 50-50 partnership between the British energy companies now holds the largest area of Atlantic Ocean off the East Coast, with three tracts totaling 477 square miles. That's roughly 40% the size of Rhode Island.
Rising Heights of Offshore Wind Turbines
Wind turbines in the ocean are much bigger than the on-land versions that dominate the landscape in places like the American Midwest. Here is how the largest turbine on the market, General Electric's 12MW Haliede X, compares in size to some well-known structures.
Credit: Nelson Hsu/NBC