Louisiana Approves First Offshore Wind Farms with Vestas and Mitsubishi

Louisiana entered agreements for two near-shore wind farms to be developed by subsidiaries of Mitsubishi and Vetas (Energy)

PUBLISHED DEC 13, 2023 7:57 PM BY THE MARITIME EXECUTIVE

 

 

Louisiana’s Department of Natural Resources approved the state’s first offshore wind operating agreements during its December board meeting opening up the potential for wind farms to be developed in the state’s waters. The two projects, which involved subsidiaries of Mitsubishi and Vestas, come as the federal lease auctions for the Gulf of Mexico have also begun but so far drew limited interest.

The board approved a 6,162-acre property agreement for Diamond Offshore Wind, a subsidiary of Mitsubishi, involving a site off the coast of Terrebonne and Lafourche parishes. The second, larger parcel involves a 59,653-acre agreement for Cajun Wind, a subsidiary of Vestas, off the coast of Cameron Parish.

No details were offered on the potential size of the wind farms or timing, with the New Orleans newspaper The Times-Picayune quoting sources saying the projects were unlikely to be large wind farms, but would have the advantages of being near-shore projects. They however would mark a fundamental change for Louisiana and the Gulf Coast.

“For generations, the state of Louisiana has been a leader in energy production and offshore wind energy is the next chapter in that great history as we expand our options for clean energy production and open new avenues for the development of our state economy,” said Governor John Bell Edwards.

State Secretary Tom Harris explained, “These being the first wind energy operating agreements for the state, we were breaking new trails in negotiating these agreements.” The state passed legislation clarifying and codifying rules on leasing state offshore areas for wind energy, Harris notes, explaining that the two agreements had different payment structures to the state as they worked to develop the industry.

Diamond Offshore Wind covers a smaller area and pays more in up-front costs and rental fees per acre, with an agreement for $308,101 up-front on the 6,100 acres and 1.5 percent of gross revenues in energy royalty over the life of the agreement. Cajun Wind has a lower per-acre fee for up-front and rental payments but a higher energy royalty over the length of the agreement. Cajun Wind pays $357,923 on its 59,000-acre agreement and 2.2 percent in a royalty.

Last year, energy service company Entergy and Diamond Offshore Wind agreed to work together on the evaluation and potential early development of wind power generation in the Gulf of Mexico. Diamond cites its parent company's experience operating wind farms and its plans for wind farms in New England, including exploring the potential for floating wind turbines in the Gulf of Maine. Vestas has been a developer of large wind farms in Europe, but in the United States so far has only been a supplier and manufacturer of its large wind turbines.

“Wind energy projects off Louisiana’s coast will benefit from having transportation, fabrication, and engineering expertise that has long supported our traditional offshore industry already in place,” predicted Edwards. “And our existing ports and offshore support companies will benefit from new customers and new opportunities to work and grow jobs.”

Four months ago, in August the federal government conducted the first Gulf Coast offshore lease auctions for the wind sector. The Department of the Interior offered three different lease areas, including two parcels off Galveston, Texas, and one parcel off Lake Charles, Louisiana. RWE successfully bid for the Lake Charles site, paying $5.6 million for an area with 1.2 gigawatts of estimated wind potential, but said it was still very much an exploratory, long-term development. Neither of the Texas parcels drew bids.

The Bureau of Ocean Energy Management at the end of October released a tentative proposal for comment before offering four more Gulf of Mexico parcels in its next auction. Three of the sites are in Texas and one would be 82 miles off the coast of Louisiana. BOEM expects to finalize the details for those auctions in 2024.

BOEM Moves Forward with More U.S. Offshore Wind Auctions and Projects

U.S. continues to move forward with plans for more offshore wind farm development

PUBLISHED DEC 11, 2023 6:24 PM BY THE MARITIME EXECUTIVE

 

 

The U.S. continues to push forward for the development of its offshore wind energy industry with steps for the next lease auction and moving toward approval of another project while at the same time, efforts are being accelerated to identify more opportunities for offshore wind farms in Maryland and the Central Atlantic region.

The Department of the Interior’s Bureau of Ocean Energy Management released details for the next proposed offshore lease auction which is likely to proceed in 2024. They are starting a public comment period for a proposed auction that would offer two parcels in the Central Atlantic. The two areas include one approximately 26 nautical miles from the Delaware Bay that would serve Maryland and Delaware potentially. The second is 35 nautical miles from the mouth of the Chesapeake Bay to serve Virginia. 

BOEM however followed through with its earlier comments and withheld a third proposed site 23.5 nautical miles from Ocean City, Maryland. In July 2023, BOEM said the area needed more study and today they said it is excluded from the proposed upcoming auction due to the “significant cost and mitigation that would be required,” for the proposed lease area. They said however that consideration would continue for this third parcel to be part of an auction as soon as 2025.

In a separate announcement, they reported that the site known as B-1 was “at this time not viable.” However, in a partnership with the Departments of Defense, Commerce, National Oceanic and Atmospheric Administration (NOAA), Cost Guard, National Aeronautics and Space Administration (NASA), and Maryland’s governor and senators, the Department of Interior said they have agreed to work together to evaluate additional areas off Maryland. 

BOEM reports it has identified a similar size and wind energy generation capacity site off Maryland. The agencies and state will work jointly to complete the evaluation of the area. It could be part of a lease sale as early as 2025.

An environmental review was also completed for Ørsted’s proposed Sunrise Wind project that would be located south of Martha’s Vineyard and east of Montauk, New York. BOEM, however, is recommending that the project be reduced in size from the proposed 94 wind turbines to a maximum of 84 with the potential for 924 MW. The decision to scale back the project was based on the geotechnical feasibility of the project and to reduce the impact on habitat while meeting the needs of neighboring states. BOEM will make the revised plan available for comment and expects to make a decision on the project early next year.

BOEM’s actions, however, might be moot as Sunrise Wind is one of the projects analysts expect Ørsted to walk away from due to financial pressures. In October, New York turned down an application from Ørsted to reset the power purchase agreement for the project but opened the door for the project to be rebid in 2024.  It is unclear how the decision to lower the number of wind turbines would impact the project.

Ørsted CEO Americas David Hardy told Reuters in October, “Sunrise Wind's viability and therefore ability to be constructed are extremely challenged without this adjustment." 

BOEM highlights that it has approved six commercial-scale wind farms and has held four auctions. They are continuing to push forward toward the target of 30 MW of offshore wind energy generation by 2030. Despite the financial pressures that emerged in 2023, the U.S.’s first two large offshore wind farms are both ready to generate power while several others are moving forward with construction.