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Auction scheduled for lease rights for wind-energy farm

The Alstom turbine that Deepwater Wind is using

The Alstom turbine that Deepwater Wind is using for its Block Island Wind Farm. The lease rights to develop a wind-energy farm on 79,350 acres of ocean 11.5 miles from Jones Beach could be granted by federal regulators in a Thursday, Dec. 15, 2016, auction. Credit: Deepwater Wind

The lease rights to develop a wind-energy farm on 79,350 acres of ocean 11.5 miles from Jones Beach could be granted by federal regulators this week. But the online bidding is only the start of a process that could take seven years or more, officials said.

The federal Bureau of Ocean Energy Management, a division of the Department of the Interior created by President Obama in 2010 to facilitate energy independence and accelerate wind-energy efforts, has said it will start the Thursday auction with an opening bid of $158,700, or around $2 per acre.

The long-awaited path to that auction had seemed clear until fishing groups, including the largest commercial fishing association on Long Island, filed suit on Thursday seeking to block it, alleging the project of 194 turbines would hinder access to vital fishing grounds.

A hearing on a request for a temporary restraining order and injunction has been scheduled for Dec. 14, a day before the auction, before U.S. District Court Judge Tanya S. Chutkan. But attorneys for both sides appear to have worked out an agreement that would let the auction go forward but give fishing groups 14 days’ notice before any final lease is executed. It awaits a judge’s approval.

BOEM spokeswoman Tracey Moriarty declined to comment on the suit, but said plans for the auction remained on schedule.

Fourteen parties, including the New York State Energy Research and Development Authority, were deemed eligible to participate in the bidding, although it’s uncertain whether all will bid. Moriarty said this auction marks the first time a government entity has bid against private developers in the six auctions for Atlantic Coast wind-energy areas.

BOEM’s auction is scheduled to take place online, and the bidding will be viewable by outside parties. Parties that accept the opening bid will advance to a second round, and the bidding will continue until a single party makes the highest bid, and wins the auction.

In addition to NYSERDA, bidders for the New York wind area include Deepwater Wind, the company that has proposed a 90-megawatt wind farm for LIPA in federal waters off Rhode Island waters, DONG Energy Wind Power, Fisherman’s Energy, Sea Breeze Energy, Statoil Wind and Convalt Energy.

This week’s scheduled bid will have a special condition called a “limited opportunity to revoke” that allows the winning bidder to withdraw their bid if they’ve previously requested the right, and the second-winning bid is that of a government authority. The condition was inserted at the request of private bidders who were interested in NYSERDA’s previously announced plan to offer a separate packaged bid to private developers should it win the auction. The top private bidder could then forfeit the lease to the authority, which has already begun required studies for the project, and will offer a power purchase agreement to the winning bidder in its auction.

Despite last week’s lawsuit, “NYSERDA will continue with its plans to bid in the auction,” a spokeswoman said last week. “If NYSERDA wins, it will be uniquely positioned to ensure offshore wind in New York is developed cost-effectively and responsibly, and is the most able to consider the needs of the various stakeholders, including the fishing industry and local communities, while also protecting the environment.”

After the bidding and a provisional winner is announced, the state attorney general’s office and the Federal Trade Commission will have 30 days to complete an antitrust review of the auction. If BOEM accepts the high bid, it will send paperwork to the winning bidder to sign the lease, provide the balance of the payment and a financial assurance.

But that’s just the start of the process that Moriarty and other BOEM officials said could take seven years or more to complete if all approvals are met. The winning bidder will have 12 months to submit a site assessment plan, and BOEM will then begin an environmental and technical review. That could take a year or more.

From there, the winner has 4 1⁄2 years to file a construction and operation plan, with all the specifics of their project laid out, including the type of and how many turbines, their layout in the ocean and the technology used. “That’s when we’ll do a robust environmental impact statement including a lot of public engagement,” Moriarty said. That process could take up to two years. Only after the statement is finalized and the developer files two more technical reports can construction begin, she said.

Terms of the offshore lease for the wind farm are for 25 years. Moriarty declined to discuss how the new administration of President-elect Donald Trump could affect the process. Trump opposed a LIPA wind farm three miles from Jones Beach near his planned catering hall (a plan he later dropped), and he sued the government of Scotland to block another one near his golf resort in that country.

“I can’t comment or speculate on what the next administration will do,” she said. “In the meantime, we’ll continue to fulfill our responsibilities.”

A Trump spokeswoman didn’t return calls and messages seeking comment.

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