Record $42.5M bid wins LI wind-farm lease

Watt's happening now: Statoil's Scottish wind farm might be a template for what's coming 11 miles off of Jones Beach.
By GREGORY ZELLER //

The U.S. subsidiary of a Norwegian energy company has placed a record $42 million bid to win the lease rights to build a wind farm 11 miles off Long Island.

Texas-based Statoil Wind US LLC, a subsidiary of Norwegian mega-utility Statoil, topped five other bidders – including the New York State Energy Research and Development Authority – in a 33-round U.S. Department of the Interior auction that kicked off Thursday.

The auction covered 79,350 acres of ocean real estate – roughly 127 square miles – between the southern Long Island and northern New Jersey coasts, and as the saying goes, things accelerated fast: Statoil Wind’s winning bid of $42.46 million was a far cry from the $158,700 (roughly $2 per acre) opening bid required by the Interior Department’s Bureau of Ocean Energy Management.

Irene Rummelhoff: Statoil “excited” by its first U.S. project.

Six contenders – including Oregon-based Avangrid Renewables, German energy company Innogy SE and Denmark-based companies DONG Energy Wind Power and Alpha Wind Energy – answered the bell. But by close of business Thursday, with bids pushing past the $25 million mark, only three bidders remained.

For its winning bid, Statoil Wind secures a preliminary one-year lease for the 79,000-plus acres, during which time it must submit a site-assessment plan to the Bureau of Ocean Energy Management. If the assessment plan is approved, the company will have an additional 54 months to submit a construction and operations plan, which the bureau will review – including a public-comment phase – and measure against other possible site uses.

With an approved construction plan, the company would have an additional 25 years to build and operate its wind farm, which it says could ultimately include more than 200 turbines and produce 1 gigawatt of power – roughly enough to power three-quarter-of-a-million homes.

The $42 million-plus bid – a record for an offshore U.S. lease, according to the Interior Department – gives the Norwegian parent company, which boasts operations in 30 countries, its first U.S. foothold, while wrapping up tidy bow on a 2016 marked by aggressive expansion.

Earlier this year, Statoil acquired 50 percent of the Arkona Wind Farm, located in the Baltic Sea off the German coast, which is slated to begin producing electricity in 2019. The company already held a 40 percent share in the Sheringham Shoal Wind Farm, which has been providing electricity to the UK since 2012, and expects to begin producing energy at its Dudgeon and Hywind farms – located off the western coasts of England and Scotland, respectively – next year.

Calling the United States “a key emerging market for offshore wind,” Statoil Executive Vice President Irene Rummelhoff said her company was “excited to have submitted the most competitive bid in a highly attractive project.”

“We now look forward to working with New York’s state agencies and contributing to New York meeting its future energy needs by applying our offshore experience and engineering expertise,” Rummelhoff said. “As today’s announcement shows, Statoil is well positioned to take part in what could be a significant build-out of offshore wind in New York and other states over the next decade.”

Although it rivaled – and ultimately defeated – NYSERDA in the Interior Department auction, Statoil Wind will “work closely with the New York State Energy Research and Development Authority on these studies and throughout the permitting process,” the executive VP added.

Heather Leibowitz, director of NYC-based watchdog Environment New York, said the completion of the Bureau of Ocean Energy Management auction marked a giant leap in the global struggle against climate change – while giving New York “a great opportunity to be a national leader in tackling climate change and developing offshore wind.”

“The successful lease sale of New York’s first Wind Energy Area is a great step forward to tapping into this tremendous clean, pollution-free resource,” Leibowitz said. “We look forward to continuing to work with local, state and national officials to bring offshore wind to New York.”