U.S. unveils offshore wind lease sites in Louisiana, Texas; Wind prices hike 14% in Europe

The wind power news you need to know.

U.S. sets out offshore wind lease sites in Gulf of Mexico

The Biden administration has identified two offshore wind lease areas in Texas and Louisiana waters, a key step towards offshore wind construction in the Gulf of Mexico.

The Bureau of Ocean Energy Management (BOEM) has designated a 546,645-acre site 24 miles off the coast of Galveston, Texas and a 188,023-acre site some 56 miles off the coast of Lake Charles, Louisiana, the Interior Department said July 20. This follows an assessment of 30 million acres west of the Mississippi River.

President Biden has set a target of 30 GW of offshore wind by 2030 and activity is spreading from the East Coast to southern and western coasts. The Interior Department plans to hold up to seven offshore wind lease auctions in 2022-2025, including new regions in the Gulf of Mexico, Central Atlantic and the West Coast.

In February, the state of Louisiana set a target of 5 GW of offshore wind capacity by 2035 in its first ever Climate Action Plan to reach net zero by 2050. Louisiana's industrial sector is responsible for two thirds of the state's carbon emissions and rising renewable energy capacity will help companies switch from fossil fuel energy supplies to clean electricity and green hydrogen, the office of Governor Jon Bel Edwards said. Louisiana will implement a Renewable and Clean Portfolio Standard (RCPS) that requires utilities to supply at least 80% from renewables by 2035, it said.

Smooth allocation of leases and permits could see the first commercial wind farms operational from around 2028, Walter Musial, Lead - Offshore Wind Research Platform at The National Renewable Energy Laboratory (NREL), told Reuters Events in March.

The Gulf of Mexico's unique wind and sea conditions will require adaptations to turbine design and operation but developers can leverage existing oil and gas infrastructure and global offshore wind savings, experts said.

“Indications are that cost may be approaching competitiveness without subsidies by 2030,” a BOEM spokesperson said.

U.S. Senate, Supreme Court deal blows to Biden climate plan

President Joe Biden vowed to take executive action to reduce climate emissions after Democratic Senator Joe Manchin withdrew crucial support for climate legislation Democrats had hoped to pass before the summer recess. Manchin's support was critical for passage of the legislation in the evenly divided Senate as it lacked any Republican backing.

"If the Senate will not move to tackle the climate crisis and strengthen our domestic clean energy industry, I will take strong executive action to meet this moment," Biden said in a statement July 15. "My actions will create jobs, improve our energy security, bolster domestic manufacturing and supply chains, protect us from oil and gas price hikes in the future, and address climate change."

A fortnight earlier, the U.S. Supreme Court hampered Biden’s plans to tackle climate change by ruling to limit the Environmental Protection Agency's (EPAs) authority to regulate greenhouse gas emissions from existing coal- and gas-fired power plants. The conservative court's 6-3 ruling on June 30 restricted the EPA's authority under the Clean Air Act anti-pollution law in a case brought by the coal-reliant state of West Virginia.

President Biden aims to decarbonise the power sector by 2035 but there are no regulations in force to reduce carbon emissions from power plants and the EPA is currently working on a new proposal that is expected to come out next spring. Attempts by previous administrations have been blocked by federal courts. The Obama-era Clean Power Plan was blocked by the Supreme Court in 2016 and a less comprehensive plan by the Trump administration was blocked by a federal appeals court in 2021.

"While this decision risks damaging our nation’s ability to keep our air clean and combat climate change, I will not relent in using my lawful authorities to protect public health and tackle the climate crisis," Biden said in a statement.

"My administration will continue using lawful executive authority, including the EPA’s legally-upheld authorities, to keep our air clean, protect public health, and tackle the climate crisis. We will work with states and cities to pass and uphold laws that protect their citizens. And we will keep pushing for additional Congressional action," the President said.

European wind offtake prices rise 14% in three months

European wind offtake prices rose by 14% in the second quarter to 72.71 euros/MWh ($74.3/MWh) and are now 52% higher than a year ago, LevelTen pricing platform said July 14.

Power purchase agreement (PPA) prices are rising as developers tackle inflationary pressures, supply chain constraints and grid connection delays. Wholesale power prices have also soared as Europe implements measures to end Russian oil and gas supplies.

                Wholesale power prices in Central & Western Europe

                                                            (Click image to enlarge)

Source: European Commission's Quarterly Electricity Market Report 

Solar PPA prices climbed 19% last quarter to 59.43 euros/MWh and are 40% higher than the same time last year.

Bullish wholesale prices and, in some cases, less competition than expected in government power auctions, is reducing the volume of corporate PPAs available and increasing prices, LevelTen said.

For example, UK wind prices hiked 24% last quarter and this may be due to recent government auctions limiting the supply of corporate PPA contracts, it said.

U.S. wind developers have faced similar supply chain and grid challenges. U.S. wind PPA prices rose 13% last quarter to $33.91/MWh and are around 36% higher than the same time last year.

Wind prices in the Southwest Power Pool (SPP) climbed 16% last quarter to around $32/MWh and are up 42% on a year ago.

The SPP network spans 14 states from Montana to Louisiana. A lack of transmission capacity in the SPP region is prompting wind curtailments and preventing developers from deploying new capacity, LevelTen said.

“The issues in SPP underscore a broader need across the U.S. for significant investments in transmission infrastructure that will allow renewables to be better utilized...[and] more economical," Rob Collier, VP of Energy Marketplace at LevelTen, said.

"We’re also seeing the impacts of the phasing out of [wind production tax credits] which developers must also account for in their PPA prices to meet internal rate of return hurdles,” he said.

Reuters Events