Nearly 400,000 acres of ocean between Nantucket and Martha’s Vineyard sold on Friday (Dec. 14) for the most money ever paid for wind-lease plots in the United States. The high prices are spurred by Massachusetts’ commitment to buy more renewable energy as it ratchets up its pledge to cut emissions statewide.
The leases sold to three companies for a combined $405.1 million, or more than $1,000 an acre, obliterating the previous record set when Norway’s national energy company Statoil bought a wind farm lease off the New York Coast for $535 an acre for a total buy of $42.5 million.
What’s more, the new record puts offshore wind energy neck-and-neck with offshore oil drilling, in terms of price paid for leases. Each of the three companies in the Massachusetts deal paid roughly $135 million. As Bloomberg points out, that is approaching the highest amount ever paid for drilling rights in the Gulf of Mexico, when Statoil paid $157 million for a lease in 2012.
Statoil—now named Equinor—is once again involved in this deal as one of the three companies buying the leases from the US government. Equinor changed its name from Statoil earlier this year to move away from the “oil” in its name and attract younger, climate-conscious employees to the business. The other two companies are Mayflower Wind Energy—which is co-owned by Shell—and Vineyard Wind, which is jointly held by a Danish and an American company. The companies will have 33 years under the leases to build and operate the wind farms after they go through environmental review.
This is a complete turnaround for wind energy in the region. Just three years ago, the exact same patch of ocean almost couldn’t sell. One parcel sold for $1.50 an acre, one for less than $1, and two others received no bids, WBUR reports.
“The joke at the time was that you could get a lease off the coast of Massachusetts for less money that you could buy a house outside of Boston,” Stephanie McClellan, director of the Special Initiative on Offshore Wind at the University of Delaware, told WBUR. “So this is just unprecedented.”
This auction likely went so differently because Massachusetts doubled the amount of offshore wind power it can purchase to 3,200 megawatts in August, which assures demand for much of the power the new wind farms will produce. Massachusetts has set a goal of running on 35% renewable energy by 2030.
If all three plots are fully developed, they could support approximately 4,100 megawatts of commercial wind energy, or enough electricity to power nearly 1.5 million homes, according to the US Bureau of Ocean Energy Management.