A Spanish energy conglomerate won the rights to develop an offshore wind farm off Kitty Hawk with a $9 million bid to the federal government Thursday.
Avangrid Renewables beat out three other bidders by posting the nation’s second-highest bid for wind farm development rights.
Avangrid’s U.S. subsidiary, based in Portland, Oregon, handled the bidding. It is already a known quantity in North Carolina as the developer and operator of the Amazon Wind Farm, which generates power for the online retailer’s data centers in Virginia.
The Amazon Wind Farm, in Pasquotank and Perquimans counties, features 104 turbines and a capacity of 208 megawatts, while the 191 square miles Avangrid leased Thursday could accommodate an offshore wind farm more than sevenfold the size if fully developed.
Avangrid operates nearly 60 inland wind farms in the United States; it has one offshore wind farm in operation in Europe and two under development, according to its website. The company issued a brief statement saying it was “well positioned to secure this bid.”
The amount the company was willing to pay to lease Atlantic Ocean parcels off North Carolina was unexpected.
“It’s extremely encouraging how the offshore wind industry feels about continued development and growth, specifically in North Carolina,” said Katharine Kollins, Chapel Hill-based president of the Southeastern Wind Coalition.
The federal Bureau of Ocean Energy Management, or BOEM, administered the auction, and identified the other bidders as Wind Future, Statoil Wind and wpd offshore Alpha. BOEM said the seven bids it has conducted for East Coast lease rights so far have generated $67 million in winning bids.
The nation’s highest bid, for $42.5 million, was awarded last year for rights to build an offshore project off New York. Bidding for North Carolina’s offshore leases edged out Maryland’s auction, which fetched $8.7 million in 2014 for about 125 square miles. The money represents lease fees developers must pay to the federal government for the right to develop on federal waters.
Kitty Hawk could be the first of several commercial-scale offshore wind farms here. Two other North Carolina leasing units, Wilmington East and Wilmington West, will be offered for lease at a later time.
The Kitty Hawk auction goes back to 2010, when the agency began working to identify suitable ocean parcels for wind farm development.
The Kitty Hawk area starts 24 nautical miles, or 27.6 statute miles, from the shore as measured from the nearest point, and extends more than 25 miles into the Atlantic Ocean. The distance from land was set back to limit visual interference from 500-foot tall turbines equipped with flashing red hazard lights that can be seen on clear nights from miles away.
Avangrind will next be able to install instruments to measure wind speeds with precise accuracy as part of its site assessment strategy. North Carolina’s coast is considered to have some of the best wind energy resources along the East Coast, but that reputation is based on estimates and preliminary data.
The United States has just one operating offshore wind farm, a 5-turbine project off the coast of Rhode Island. Before Thursday, BOEM had conducted six previous offshore wind farm lease auctions for more than 1,500 square miles of federal waters.
Any offshore wind farm off North Carolina is years in the offing, as long as offshore wind remains among the most expensive sources of electricity.
“Right now the cost of offshore wind is not in line with Southeast electricity prices,” Kollins said. “I doubt you’ll see construction for at least a decade.”