The dust has settled on the Bureau of Ocean Energy Management’s (BOEM) first west coast auction for federal offshore wind lease areas. The California auction for the Morro Bay and Humboldt Call Areas brought an aggregate $757,100,000 to federal coffers at a $2,028 per acre value (with variances between the areas discussed below). This per acre value is well below the results of the other BOEM auctions of 2022, New York Bight (approximately $9,000 per acre, the highwater mark in the U.S.) and Carolina Long Bay (approximately $2,800 per acre). The final figure places the final result firmly within, but on the low end of, BOEM’s pre-auction estimate of $400M - $1.6B.
We previously explored auction rules, multi-factor bidding, potential factors impacting bidder behavior and permitting issues. Here, we provide initial takeaways from the auction results.
Despite a record 43 qualified bidders being listed in the Final Sale Notice for the auction, there were far fewer bidders involved throughout the process, with six bidders active during the majority of the nearly two-day auction after seven opened the bidding Tuesday morning. This reflects the fact that some qualified bidders chose not to participate, consistent with other recent auctions.
The auction moved more slowly than Bight, with bidders acting more cautiously within an auction format that allowed for bidder switching between areas round by round. The per acre pricing of the Humboldt areas ($2,504 per acre) seems to reflect higher bidder interest in those two areas than the three Morro Bay areas ($1,766 per acre), despite the bidding being much more active in Morro Bay early in the process.
The extent of the impact of non-monetary credits on the final numbers is unclear based on available information, but it does seem that market conditions impacted bidding based on final pricing. This is unsurprising given the change in macro-economic conditions since the Bight and Long Bay auctions.
Provisional winners can be found here. The Biden Administration’s press release on the auction can be found here.