WASHINGTON — The United States government netted a record $4.37 billion on Friday from the sale of six offshore wind leases off the coasts of New York and New Jersey, a major step in the Biden administration’s goal of ushering in a future powered by renewable energy.
The auction, of more than 488,000 acres in the Atlantic Ocean between Cape May, N.J., and Montauk Point, N.Y., was the Biden administration’s first offshore lease sale.
When turbines are build and start working, the auctioned acres are expected to generate up to 7,000 megawatts, enough to power nearly 2 million homes.
The Interior Department has said between that project and others currently under review, it hopes to see some 2,000 turbines churning from Massachusetts to North Carolina by the end of this decade.
“This week’s offshore wind sale makes one thing clear: the enthusiasm for the clean energy economy is undeniable and it’s here to stay,” Interior Secretary Deb Haaland said in a statement. She called the lease sales part of the administration’s “commitment to tackle the climate crisis and create thousands of good-paying, union jobs across the nation.”
The three-day, 64-round bidding war among more than a dozen companies for a triangular section of ocean known as the New York Bight surpassed expectations. The Interior Department said it was the highest-grossing competitive offshore energy lease sale in history, including oil and gas lease sales. Analysts noted that leases were sold at about $10,700 per acre, more than 10 times the previous record of $1,000 per acre. Industry analysts said even they were surprised by the level of interest, and attributed it to growing investment in offshore wind as well as strong state and federal policies.
“The record-shattering interest in the New York Bight lease sale is testament to how bright the American offshore wind outlook is and how confident developers are in the strength of the U.S. offshore wind industry as a whole,” said Erik Milito, president of the National Ocean Industries Association, which represents offshore energy companies, in a statement.
Mr. Milito called the auction “a watershed moment for American offshore wind” and said the demand for more offshore wind leasing was growing.
The Biden administration has set a goal of developing 30,000 megawatts of offshore wind energy nationwide by 2030. A report cited by the administration found investment by the burgeoning offshore wind industry will be worth $109 billion in the next ten years.
Heather Zichal, chief executive of the American Clean Power Association, which represents wind, solar, storage and transmission companies, said the lease sale “blew our expectations out of the water” and heralded a new era of demand for clean energy.
“This is a major step forward for the U.S. in terms of standing up a new industry, the domestic manufacturing opportunities that come with it and another market signal in favor of U.S. energy independence,” she said.
The Bureau of Ocean Energy Management, an arm of the Interior Department that oversees offshore activity, designated the New York Bight a “priority offshore wind area” in March of 2021. Last month, Secretary Haaland and the governors of New York and New Jersey issued a “shared vision” for bolstering the offshore wind energy domestic supply chain in the region.
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Over the past year the Biden administration also gave final approval to the nation’s first commercial-scale offshore wind farm off the coast of Martha’s Vineyard, Mass., and said it would open California’s coast to wind farms. The Bureau of Ocean Energy Management also is expected to review 16 plans to construct and operate commercial offshore wind facilities by 2025, which the agency said would represent more than 22 gigawatts of clean energy.
Timothy Fox, a vice president and analyst with Clearview Energy Partners, a Washington-based research firm, said he believed state policies had boosted investment as much as federal initiatives. He noted that New York and New Jersey had ambitious targets for offshore wind deployment — 9,000 megawatts and 7,500 megawatts, respectively, by 2035.
At the same time, he and others noted, the fishing industry has argued that wind farms will conflict with prime commercial fishing areas for scallops, clams and other seafood.
“While we expect the Biden administration to point to the auction as an example of its green energy bona fides, we caution that, long term, the greatest legal risk facing offshore wind could be the potential impact projects have on endangered species,” Mr. Fox said.
“Federal restrictions can be unforgiving when any energy project would impose material risks on a listed endangered species or its critical habitat,” he cautioned.
The Interior Department said that, as part of its review, the agency had reduced the acreage of the lease sale by 72 percent from its original plan “to avoid conflict with ocean users, and minimize environmental impacts.”
Administration officials said that before the New York Bight leases are finalized, the Department of Justice and Federal Trade Commission must conduct an anti-competitiveness review of the auction.