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2 June 2022

California’s floating wind set for lift-off with 4.5 GW auction

California’s floating wind sector will be kickstarted by a 4.5 GW leasing round, as announced by the US Bureau of Ocean Energy Management (BOEM) this week. Having been plagued by bureaucracy in the past, the success of this auction could be key to realizing one of the country’s hottest prospects in decarbonizing its power grid.

Published on Tuesday, the California Proposed Sale Notice outlines five key areas that could be made available for offshore wind projects in the Morro Bay and Humboldt wind energy areas. Combined, the sites – covering 150,000 hectares of water – could provide up to 10% of California’s energy needs and power up to 1.5 million homes.

The notice period is a 60-day public comment period to seek feedback on several lease stipulations. It also includes proposed lease provisions and conditions, auction details – such as the criteria for evaluating competing bids and award procedures – and lease execution.

For example, it has been suggested that a 2.5% bidding credit will be awarded to bidders that commit to ‘community benefit’ within project proposals. A 20% credit will also be available to bidders who commit to invest in programs that will advance US offshore wind energy workforce training and supply chain development.

Other project requirements will aim to ensure that project labor agreements protect jobs throughout construction, while also engaging with tribes, underserved communities, ocean users, and agencies.

Prospective bidders, that have not previously qualified for the leasing round, will be required to submit qualification materials to BOEM by August 1. So far, there are 23 developers that have already qualified, after Calls for Information and Nominations in 2018 and 2021. The list currently includes the likes of Avangrid, EDF, EDPR, Equinor, Orsted, RWE, Shell, and US Mainstream Offshore, although it is expected that more floating-specific developers will join the final list before it is published.

If all goes well, the first lease from the areas could take place in mid-2022, with the resultant projects likely to come online before the end of the decade.

Earlier this month, the California Energy Commission (CEC) announced a preliminary target to have 3 GW of floating wind capacity to be installed off the state’s coast by 2030, rising to 15 GW installed by 2045, and up to 20 GW by 2050.

Not only will this help toward President Biden’s objective to deploy 30 GW of offshore wind across the country by 2030, powering 10 million homes, but it would also help the country’s offshore wind sector catch up with its booming counterparts in Europe and China. Currently, the US has just 42 MW of offshore wind capacity installed – less than 0.1% of the global total.

BOEM has previously said that at least 16 offshore wind farms will be approved off the Pacific coast of California by 2025. The projects aim to reaffirm California’s status as a climate trailblazer within the country; the state set out in 2018 its transition to 100% clean energy by 2045 – a target which will require approximately 140 GW of renewable energy and storage capacity.

With greater capacity factors than both onshore wind and solar power, offshore wind could be a contributor towards this. Floating wind is still an emerging technology, with only small-scale demonstrator projects in existence off the east coasts of Scotland and Portugal, and several larger facilities under construction across Europe.

The levelized cost of energy for floating wind is currently approximately double the $108 per MWh for fixed-based offshore wind, but this is expected to fall rapidly as the technology reaches economies of scale. The US Department of Energy has already invested more than $100 million in research and development for floating wind. Many even expect that it may become the most cost-effective form of offshore wind within a decade, due to the reduced installation costs associated with floating platforms; rather than operating expensive installation vessels offshore for several months, turbines can be constructed at dedicated harbors, before being towed out to sea.

Morro Bay and Humboldt will set the scene for floating wind in the USA. Despite its 370-kilometer coastline, California is situated on the Pacific continental shelf, where water depths reach 1,000 meters at just 25 kilometers from the shore. Given that fixed-based offshore wind farms are typically 40 kilometers offshore, and require water depths of less than 40 meters, floating platforms will be mandatory for any offshore wind buildout in California.

NREL has previously claimed that the technical potential for offshore wind in Californian waters could be as high as 112 GW, including 8.4 GW within the federal Bureau of Ocean Energy Management’s three designated call areas. Initial studies of Humboldt County – located near the state’s border with Oregon – have indicated that capacity factors in the region are likely to lie in the region of 45% to 54%, if turbines of 12 MW capacity are used.

Morro Bay, situated at the center of the state’s coast, has been outlined as an ideal location to replace the 2.3 GW Diablo Canyon nuclear plant when it is retired in 2025. The Castle Wind project, a joint venture between Trident Winds and EnBW, could be among the favorites for this; having been introduced five years ago, the project is still awaiting approval.

Other companies are trying to shoulder their way into the Californian floating wind sector before it takes off. Oil major BP recently acquired stakes in two of Equinor’s US offshore wind farms, with a view to heading over to the west coast in the future. Ocean Winds – a new joint venture between Engie and EDPR – has stated plans to become the ‘Orsted’ of floating wind, and is working on a 150 MW floating wind pilot concept in Humboldt, which it hopes to install in the back end of the decade.

Many of the feasibility studies surrounding these projects have indicated a weakness in California’s transmission if it wants to build out offshore capacity. If a project were to be built in Humboldt County, for instance, 500 kilometers of transmission – subsea or otherwise – would be required to provide the power to San Francisco, the nearest city.

However, with projects likely to surpass 2 GW in capacity, plans are emerging for a subsea cable to run in parallel to the coast, servicing a range of new projects that will be installed over the next 20 years. Floating projects will be able to mollify fears of spoiling beauty by being towed far out to sea beyond the horizon and using subsea cables rather than onshore transmission lines.

Rethink Energy anticipates that California will see several pilot projects for floating wind around 2024, each with capacity between 10 MW and 50 MW; the maximum capacity that the current transmission network can cope with in the proposed projects’ location is 150 MW. However, by 2028, utility scale projects of up to 500 MW could be bearing fruit, putting the 3 GW target by 2030 well within reach. Without the supply chain bottlenecks on the east coast, California’s early infrastructure build out will be self-servicing, and will only be limited by the rate at which transmission upgrades can be performed in areas like Humboldt.

At the end of the decade, east-coast offshore wind development will be in full swing – somewhat off the back of President Biden’s pledge to double down on efforts in the sector. But as floating wind emerges, capacity additions on the west coast could hit 3 GW per year by 2035, when around 12 GW could be installed in total – mostly in California – providing more than a quarter of the total US offshore wind capacity.