US to lease Atlantic Ocean for offshore wind farm off Kitty Hawk

Wind turbines like these off Block Island, R.I. could be springing up off the coast of Kitty Hawk in the near future.
Wind turbines like these off Block Island, R.I. could be springing up off the coast of Kitty Hawk in the near future. AP

A federal agency said Tuesday it is offering 191 square miles in the Atlantic Ocean for a commercial lease to develop an offshore wind farm off Kitty Hawk.

The announcement by the U.S. Bureau of Ocean Energy Management marks more than six years of research and analysis for developing an industrial-scale wind farm off North Carolina’s coastline. Much of the ocean area initially identified by U.S. officials was scratched off the list because it conflicted with shipping routes, military zones, environmental ecosystems as well as tourism and recreation, which are significant contributors to the economies of coastal communities.

Final lease terms will be issued Thursday, and the ocean waters are expected to be leased March 16. Those deadlines could be upended if the incoming administration of president-elect Donald Trump sets different priorities. Agency officials have said the bidding for the offshore parcel will start at $244,800, but noted that bidding on other federal leases in the Atlantic Ocean had reached several million dollars.

The area to be developed begins 24 nautical miles, or 27.6 statute miles, from the shore at its nearest point, according to a map issued by the bureau. Federal officials have identified nine companies that are qualified to participate in the bidding.

One of the potential bidders, Avangrid Renewables, is already operating an inland 104-turbine wind farm in Pasquotank and Perquimans counties to generate power for data centers owned by online retailer Amazon. One of the other identified bidders, Statoil Wind US, last month won a lease to develop a wind farm off the coast of New York with a $42.5 million bid for 124 square miles of ocean area.

The ultimate prospects for the Kitty Hawk project will depend on market demand for offshore wind energy, which is currently one of the nation’s most expensive forms of electricity.

“What it really hinges on is having a buyer for the electricity,” said Katharine Kollins, Chapel Hill-based president of the Southeastern Wind Coalition. “In a sense, it’s a real estate play. You’re making a calculated decision that there will be a buyer in a certain number of years that isn’t there now.”

Two other leasing units off North Carolina, called Wilmington East and Wilmington West, have been attached to the South Carolina offshore lease area and will be offered for lease at a later time.

The United States currently has one offshore wind farm in operation, a 5-turbine project off the coast of Rhode Island. BOEM’s plans call for holding lease sales throughout the Atlantic seaboard. To date, the bureau has held six competitive lease sales for more than 1 million acres in federal waters.

From the time a lease is awarded, it could take anywhere from five to 10 hears to build the wind farm as the project goes through various stages of review. The developer holding the lease would pay annual rent to the federal government until the project is completed, and then would pay an annual operating fee based on power output and on wholesale electricity costs.

John Murawski: 919-829-8932, @johnmurawski