US to hold first offshore wind rights sale in Gulf of Mexico next month

WASHINGTON (Reuters) -The United States on Thursday said the first offshore wind power auction in the Gulf of Mexico will take place next month, an industry milestone President Joe Biden discussed during a trip to highlight the administration’s efforts to boost clean energy.

In February, the United States proposed to expand offshore wind power developments into the Gulf of Mexico, introducing the nascent clean energy industry into a major hub for oil and gas production.

Biden has made the expansion of offshore wind a cornerstone of his agenda to fight fossil-fuel driven climate change.

The Interior Department said the sale will take place on Aug. 29.

“We’re going to the Gulf,” Biden said in a speech in Philadelphia. You think I’m kidding? You ain’t seen nothing yet.”

According to a sale document, companies qualified to bid at the sale include units of European energy companies Equinor, Shell (LON:), RWE and TotalEnergies, all of which are already developing U.S. offshore wind leases. Equinor and Shell also have major oil and gas operations in the Gulf.

Newer entrants to the U.S. offshore wind industry include divisions of South Korea’s Hanwha, U.S. renewable energy developer Hecate Energy, and Houston private equity firm Quantum (NASDAQ:) Capital.

The sale will include a lease area of 102,480 acres offshore Lake Charles, Louisiana, and two lease areas totaling nearly 200,000 acres offshore Galveston, Texas, the White House said. Companies will bid on the right to develop those acres.

The areas have the potential to generate about 3.7 Gigawatts and power, supplying nearly 1.3 million homes with clean energy, the Interior Department said.

The National Ocean Industries Association (NOIA), which represents both offshore wind and oil and gas companies, said there was “remarkable synergy” between the two energy industries.

“With the introduction of offshore wind in the Gulf Coast, numerous local companies will now have the opportunity to actively participate in the construction of new wind projects closer to home,” NOIA President Erik Milito said in a statement.

The Biden administration has held three offshore wind lease auctions, including the largest-ever such U.S. sale last year for areas off the New York and New Jersey coasts, that attracted a record $1.5 billion in bids, and the first ever off the Pacific coast in California.

The Gulf’s lower wind speeds, soft soils and hurricanes are potential challenges the industry could face that are unique to the region. The Southeast also has low power prices that could make it harder for higher-cost offshore wind generation to compete for electricity contracts.

Biden traveled to Philadelphia on Thursday to pitch the promise of a green economy to union workers, some of whom remain skeptical that the solar, wind and electric vehicle industries can deliver the same economic punch for organized labor as oil refineries and fossil fuel-fired power plants.