The rundown on offshore wind bidding credits

Sometime this fall, the federal government will hold an auction for leases to develop the first two California offshore wind energy areas — including one off the coast of Morro Bay.

Unlike previous auctions that have been entirely monetary, the U.S. Bureau of Ocean Energy Management (BOEM) is proposing a system under which developers can enhance their bids with certain non-monetary factors.

These bidding credits, as BOEM has termed them, essentially increase the value of a developers bid as a bonus for committing to specific activities. The Proposed Sale Notice outlines two types of bidding credits that could have important implications for the Central Coast community and wider statewide offshore wind planning efforts.

While the final terms have yet to be determined, the proposed credits include:

Community Benefit Agreements (CBAs)

BOEM is considering establishing bidding credits for CBAs as a way to encourage developers to support affected communities and stakeholder groups.

BOEM is proposing a CBA bidding credit of 2.5% of the total bid aimed at assisting affected fishing and related ocean-users. BOEM is also considering whether to establish a more general CBA for a broader group of affected community stakeholders that could promote benefits such as job creation, education opportunities, or increased engagement. 

As proposed, developers could obtain the credit either for an existing CBA or for a commitment to enter one with a community or stakeholder group and by specifying the monetary, material or other benefits provided to the impacted group. It does not require developers to make specific financial commitments.

Supply Chain and Workforce Training Credit

Developers can also obtain a 20% bidding credit for activities to develop a domestic offshore wind supply chain and promote workforce training. This credit requires developers to make a specific financial commitment equivalent to 80% of the value of the 20% credit.

Such credits could be helpful in advancing efforts to scale-up a new offshore wind sector and supply chain across California, although the credits are not currently scoped to ensure investment at a regional or state level.   

What’s Next?

After review public comment on the draft notice, which closed Aug. 1, BOEM will develop and publish the Final Sale Notice, after which the auction date will be announced.

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