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An upcoming lease sale will be historic — but also quite risky for offshore wind.
The Biden administration will be holding the first ever auction for the right to develop offshore wind farms in the Gulf of Mexico on Tuesday. The sale represents a hopeful, historic shift for the region, where the economy has long been defined by oil and gas.
But wind energy is not a sure bet in the Gulf — at least not yet. Slower winds and frequent hurricanes will raise costs and require new turbine designs. Low power prices in the area and a lack of supportive policy make for an uncertain market. These hurdles mount on top of what is already a tumultuous time for the industry. Costs for offshore wind farms on the East Coast have soared due to high interest rates, inflation, and supply chain constraints.
“The business case in the Gulf of Mexico for offshore wind is very vague, and very uncertain,” Chelsea Jean-Michel, a wind analyst at BloombergNEF, told me. “It doesn't really make a lot of sense.”
The Bureau of Ocean Energy Management has put up three areas for sale in the Gulf, which it estimates will produce about 3.7 gigawatts of energy once developed, or enough to power nearly 1.3 million homes. Two of the areas are 30 to 40 miles off the coast of Galveston, Texas, while the third is closer to Lake Charles, Louisiana, just over 40 miles offshore.
Analysts expect Tuesday’s auction to be uncompetitive and the leases to sell for low prices that bake in uncertainty. Sixteen wind developers have signed up to participate, including legacy oil companies Shell, TotalEnergies (formerly known as Total), and Equinor, as well as renewable-focused companies that have offshore projects in the Northeast, like Invenergy, and newcomers, like energyRe. But they may not all end up putting in bids. More than 40 entities were registered to bid on offshore leases in California last December, but only seven ultimately took part in the auction.
The federal government has been studying offshore wind development in the Gulf of Mexico for years. In 2020, National Renewable Energy Lab scientists published an assessment of different types of energy resources that could go in the Gulf, including wave energy and ocean-based solar panels. The authors found that offshore wind had the most potential, by far, but would face numerous challenges, and likely be more expensive than offshore wind energy in the Northeast.
For one, engineers need to design turbines that can safely and economically produce energy in the Gulf’s unique weather conditions. Most of the time, the Gulf has lower wind speeds than the coasts, but other times, it has hurricane-force gales. The report called this “a challenging design optimization problem” and says that a new class of turbines will be needed. I spoke to Walter Musiel, one of the authors, who said that this was doable, and that turbines have since been installed in typhoon-prone areas in Asia that will provide some helpful data. The challenge, he said, will be building a supply chain for turbines with bigger rotors, and figuring out how intense future hurricanes could be in order to design blades that are strong enough.
The Gulf also has advantages that the report said could offset some of these expenses. Smaller waves and shallower water could lower capital costs for installation and maintenance. The report also cited “lower labor costs” in the region. However, workers there are currently fighting to ensure jobs in offshore wind depart from the low-wage, unsafe, exploitative conditions that pervade the local construction and offshore oil industries.
Another big advantage, though, is the maturity of the area’s offshore oil industry. “Despite low winds, the Gulf of Mexico is uniquely positioned,” wrote David Foulon, the managing director for offshore wind at TotalEnergies, in comments to BOEM, “thanks to its unequaled history of offshore expertise, established industrial supply chain, strength of workforce base, and maritime assets’ pool that can drive the growth of offshore wind in the U.S. to new heights and spread around the world thereafter.”
Justin Williams, the vice president of communications at the National Ocean Industries Association, told me Gulf Coast companies have already brought their expertise to offshore wind construction in the Northeast. “Take the Block Island Wind Farm offshore Rhode Island,” he said. “Gulf Island Fabrication built the steel jackets for its foundations and Montco Offshore provided heavy lift vessels to move the equipment on site.”
The National Renewable Energy Lab study took these benefits into account. But it still found that offshore wind energy would be pricier in the Gulf of Mexico than elsewhere. While the lab expects the average cost of offshore wind to land at $63 per megawatt-hour by 2030, it estimated that Gulf wind would cost in the range of $73 to $91 per megawatt-hour by that date. That could make it harder for Gulf wind projects to compete in local energy markets, which have lower power prices than the Northeast.
The region also lacks the policy support found in the Northeast. Massachusetts plans to contract 5,700 megawatts by 2027, New York has a goal of 9,000 megawatts by 2035, and New Jersey recently increased its goal to 11,000 megawatts by 2040. These policies gave developers a level of certainty that there would be a buyer for the electricity generated. Although Louisiana has a Climate Action Plan that recommends the state procure 5,000 megawatts of offshore wind energy by 2035, it’s not legally binding and no utilities have included offshore wind in their resource plans yet.
“They’re the only state down there that has expressed any interest,” Samantha Woodworth, a senior research analyst for North America wind at Wood Mackenzie, told me in an email. “Unless there are state-driven procurement targets or unless the project can produce power at significantly lower cost than what has bid elsewhere in the U.S. and somehow balance that with sufficient project returns, [offshore wind] projects down there are likely to be uneconomic.”
In public comments submitted to BOEM, the American Clean Power Association, the leading industry group for offshore wind, also warned that the leases would not provide developers with the certainty needed to establish a local workforce or supply chain. It urged the agency to either increase the number of leases or establish a regular leasing schedule. But this is the only such sale the agency has announced to date.
However, when I reached out to American Clean Power to ask how its members were approaching this uncertain environment, the group echoed Total’s optimism about the strengths of the local workforce and supply chain. “The region is eager to get into the offshore wind game, and developers understand both the challenges and opportunities that exist in building in the Gulf Coast,” spokesperson Phil Sgro said by email.
Jenny Netherton, a senior program manager at the Southeastern Wind Coalition, which is made up of nonprofits and energy companies, told me that there’s a lot of room for innovation and to try “different routes to market.” For example, developers could forgo the energy market altogether and sell their electricity directly to industrial clients, such as incoming green hydrogen production facilities. Louisiana currently produces 30% of the country’s hydrogen through a polluting process using natural gas. But the federal government has billions of dollars in grants and subsidies available to develop new facilities that produce it with renewable electricity.
If turbines do go up in the Gulf, it may not be until 2034-2035, according to BloombergNEF. This means that communities who are looking forward to the clean energy and economic benefits of a new offshore wind industry could end up waiting a lot longer than they might have hoped.
Local environmental justice groups are already frustrated that the BOEM did not include an incentive for developers to create community benefits in the lease terms. The lease terms for the recent offshore wind sale in California gave companies up to a 10% discount on their purchase if they pledged to spend a comparable amount on community benefits, such as hiring commitments, job training, or economic contributions. If fulfilled, nearly $53 million will go toward these agreements in California.
“It was disappointing to see,” said Jackson Voss, climate policy coordinator for the Louisiana-based Alliance for Affordable Energy. “I don't think that it makes very much sense for different regions of the country to receive different benefits, especially considering the Biden administration’s commitment to environmental justice.”
The Gulf lease terms have a similar provision but it is limited to investments in local workforce training, supply chains, and a fisheries fund that will be used to compensate fishermen for potential losses. A spokesperson for BOEM told me the agency determined it would be too challenging to implement community benefits agreements in the Gulf equitably “due to the number and variety of community groups.”
Overall, the challenges facing Gulf offshore wind are representative of a theme that runs through renewable energy development. As much as the costs for technologies like wind and solar have plunged, what works in one place may not work in another. The cost of offshore wind in the Gulf may never match the cost of offshore wind in the Atlantic. But as Netherton said, there’s still a lot of room for innovation.
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Defenders of the Inflation Reduction Act have hit on what they hope will be a persuasive argument for why it should stay.
With the fate of the Inflation Reduction Act and its tax credits for building and producing clean energy hanging in the balance, the law’s supporters have increasingly turned to dollars-and-cents arguments in favor of its preservation. Since the election, industry and research groups have put out a handful of reports making the broad argument that in addition to higher greenhouse gas emissions, taking away these tax credits would mean higher electricity bills.
The American Clean Power Association put out a report in December, authored by the consulting firm ICF, arguing that “energy tax credits will drive $1.9 trillion in growth, creating 13.7 million jobs and delivering 4x return on investment.”
The Solar Energy Industries Association followed that up last month with a letter citing an analysis by Aurora Energy Research, which found that undoing the tax credits for wind, solar, and storage would reduce clean energy deployment by 237 gigawatts through 2040 and cost nearly 100,000 jobs, all while raising bills by hundreds of dollars in Texas and New York. (Other groups, including the conservative environmental group ConservAmerica and the Clean Energy Buyers Association have commissioned similar research and come up with similar results.)
And just this week, Energy Innovation, a clean energy research group that had previously published widely cited research arguing that clean energy deployment was not linked to the run-up in retail electricity prices, published a report that found repealing the Inflation Reduction Act would “increase cumulative household energy costs by $32 billion” over the next decade, among other economic impacts.
The tax credits “make clean energy even more economic than it already is, particularly for developers,” explained Energy Innovation senior director Robbie Orvis. “When you add more of those technologies, you bring down the electricity cost significantly,” he said.
Historically, the price of fossil fuels like natural gas and coal have set the wholesale price for electricity. With renewables, however, the operating costs associated with procuring those fuels go away. The fewer of those you have, “the lower the price drops,” Orvis said. Without the tax credits to support the growth and deployment of renewables, the analysis found that annual energy costs per U.S. household would go up some $48 annually by 2030, and $68 by 2035.
These arguments come at a time when retail electricity prices in much of the country have grown substantially. Since December 2019, average retail electricity prices have risen from about $0.13 per kilowatt-hour to almost $0.18, according to the Bureau of Labor Statistics. In Massachusetts and California, rates are over $0.30 a kilowatt-hour, according to the Energy Information Administration. As Energy Innovation researchers have pointed out, states with higher renewable penetration sometimes have higher rates, including California, but often do not, as in South Dakota, where 77% of its electricity comes from renewables.
Retail electricity prices are not solely determined by fuel costs Distribution costs for maintaining the whole electrical system are also a factor. In California, for example,it’s these costs that have driven a spike in rates, as utilities have had to harden their grids against wildfires. Across the whole country, utilities have had to ramp up capital investment in grid equipment as it’s aged, driving up distribution costs, a 2024 Energy Innovation report argued.
A similar analysis by Aurora Energy Research (the one cited by SEIA) that just looked at investment and production tax credits for wind, solar, and batteries found that if they were removed, electricity bills would increase hundreds of dollars per year on average, and by as much as $40 per month in New York and $29 per month in Texas.
One reason the bill impact could be so high, Aurora’s Martin Anderson told me, is that states with aggressive goals for decarbonizing the electricity sector would still have to procure clean energy in a world where its deployment would have gotten more expensive. New York is targetinga target for getting 70% of its electricity from renewable sources by 2030, while Minnesota has a goal for its utilities to sell 55% clean electricity by 2035 and could see its average cost increase by $22 a month. Some of these states may have to resort to purchasing renewable energy certificates to make up the difference as new generation projects in the state become less attractive.
Bills in Texas, on the other hand, would likely go up because wind and solar investment would slow down, meaning that Texans’ large-scale energy consumption would be increasingly met with fossil fuels (Texas has a Renewable Portfolio Standard that it has long since surpassed).
This emphasis from industry and advocacy groups on the dollars and cents of clean energy policy is hardly new — when the House of Representatives passed the (doomed) Waxman-Markey cap and trade bill in 2009, then-Speaker of the House Nancy Pelosi told the House, “Remember these four words for what this legislation means: jobs, jobs, jobs, and jobs.”
More recently, when Democratic Senators Martin Heinrich and Tim Kaine hosted a press conference to press their case for preserving the Inflation Reduction Act, the email that landed in reporters’ inboxes read “Heinrich, Kaine Host Press Conference on Trump’s War on Affordable, American-Made Energy.”
“Trump’s war on the Inflation Reduction Act will kill American jobs, raise costs on families, weaken our economic competitiveness, and erode American global energy dominance,” Heinrich told me in an emailed statement. “Trump should end his destructive crusade on affordable energy and start putting the interests of working people first.”
That the impacts and benefits of the IRA are spread between blue and red states speaks to the political calculation of clean energy proponents, hoping that a bill that subsidized solar panels in Texas, battery factories in Georgia, and battery storage in Southern California could bring about a bipartisan alliance to keep it alive. While Congressional Republicans will be scouring the budget for every last dollar to help fund an extension of the 2017 Tax Cuts and Jobs Act, a group of House Republicans have gone on the record in defense of the IRA’s tax credits.
“There's been so much research on the emissions impact of the IRA over the past few years, but there's been comparatively less research on the economic benefits and the household energy benefits,” Orvis said. “And I think that one thing that's become evident in the last year or so is that household energy costs — inflation, fossil fuel prices — those do seem to be more top of mind for Americans.”
Opinion modeling from Heatmap Pro shows that lower utility bills is the number one perceived benefit of renewables in much of the country. The only counties where it isn’t the number one perceived benefit are known for being extremely wealthy, extremely crunchy, or both: Boulder and Denver in Colorado; Multnomah (a.k.a. Portland) in Oregon; Arlington in Virginia; and Chittenden in Vermont.
On environmental justice grants, melting glaciers, and Amazon’s carbon credits
Current conditions: Severe thunderstorms are expected across the Mississippi Valley this weekend • Storm Martinho pushed Portugal’s wind power generation to “historic maximums” • It’s 62 degrees Fahrenheit, cloudy, and very quiet at Heathrow Airport outside London, where a large fire at an electricity substation forced the international travel hub to close.
President Trump invoked emergency powers Thursday to expand production of critical minerals and reduce the nation’s reliance on other countries. The executive order relies on the Defense Production Act, which “grants the president powers to ensure the nation’s defense by expanding and expediting the supply of materials and services from the domestic industrial base.”
Former President Biden invoked the act several times during his term, once to accelerate domestic clean energy production, and another time to boost mining and critical minerals for the nation’s large-capacity battery supply chain. Trump’s order calls for identifying “priority projects” for which permits can be expedited, and directs the Department of the Interior to prioritize mineral production and mining as the “primary land uses” of federal lands that are known to contain minerals.
Critical minerals are used in all kinds of clean tech, including solar panels, EV batteries, and wind turbines. Trump’s executive order doesn’t mention these technologies, but says “transportation, infrastructure, defense capabilities, and the next generation of technology rely upon a secure, predictable, and affordable supply of minerals.”
Anonymous current and former staffers at the Environmental Protection Agency have penned an open letter to the American people, slamming the Trump administration’s attacks on climate grants awarded to nonprofits under the Inflation Reduction Act’s Greenhouse Gas Reduction Fund. The letter, published in Environmental Health News, focuses mostly on the grants that were supposed to go toward environmental justice programs, but have since been frozen under the current administration. For example, Climate United was awarded nearly $7 billion to finance clean energy projects in rural, Tribal, and low-income communities.
“It is a waste of taxpayer dollars for the U.S. government to cancel its agreements with grantees and contractors,” the letter states. “It is fraud for the U.S. government to delay payments for services already received. And it is an abuse of power for the Trump administration to block the IRA laws that were mandated by Congress.”
The lives of 2 billion people, or about a quarter of the human population, are threatened by melting glaciers due to climate change. That’s according to UNESCO’s new World Water Development Report, released to correspond with the UN’s first World Day for Glaciers. “As the world warms, glaciers are melting faster than ever, making the water cycle more unpredictable and extreme,” the report says. “And because of glacial retreat, floods, droughts, landslides, and sea-level rise are intensifying, with devastating consequences for people and nature.” Some key stats about the state of the world’s glaciers:
In case you missed it: Amazon has started selling “high-integrity science-based carbon credits” to its suppliers and business customers, as well as companies that have committed to being net-zero by 2040 in line with Amazon’s Climate Pledge, to help them offset their greenhouse gas emissions.
“The voluntary carbon market has been challenged with issues of transparency, credibility, and the availability of high-quality carbon credits, which has led to skepticism about nature and technological carbon removal as an effective tool to combat climate change,” said Kara Hurst, chief sustainability officer at Amazon. “However, the science is clear: We must halt and reverse deforestation and restore millions of miles of forests to slow the worst effects of climate change. We’re using our size and high vetting standards to help promote additional investments in nature, and we are excited to share this new opportunity with companies who are also committed to the difficult work of decarbonizing their operations.”
The Bureau of Land Management is close to approving the environmental review for a transmission line that would connect to BluEarth Renewables’ Lucky Star wind project, Heatmap’s Jael Holzman reports in The Fight. “This is a huge deal,” she says. “For the last two months it has seemed like nothing wind-related could be approved by the Trump administration. But that may be about to change.”
BLM sent local officials an email March 6 with a draft environmental assessment for the transmission line, which is required for the federal government to approve its right-of-way under the National Environmental Policy Act. According to the draft, the entirety of the wind project is sited on private property and “no longer will require access to BLM-administered land.”
The email suggests this draft environmental assessment may soon be available for public comment. BLM’s web page for the transmission line now states an approval granting right-of-way may come as soon as May. BLM last week did something similar with a transmission line that would go to a solar project proposed entirely on private lands. Holzman wonders: “Could private lands become the workaround du jour under Trump?”
Saudi Aramco, the world’s largest oil producer, this week launched a pilot direct air capture unit capable of removing 12 tons of carbon dioxide per year. In 2023 alone, the company’s Scope 1 and Scope 2 emissions totalled 72.6 million metric tons of carbon dioxide equivalent.
If you live in Illinois or Massachusetts, you may yet get your robust electric vehicle infrastructure.
Robust incentive programs to build out electric vehicle charging stations are alive and well — in Illinois, at least. ComEd, a utility provider for the Chicago area, is pushing forward with $100 million worth of rebates to spur the installation of EV chargers in homes, businesses, and public locations around the Windy City. The program follows up a similar $87 million investment a year ago.
Federal dollars, once the most visible source of financial incentives for EVs and EV infrastructure, are critically endangered. Automakers and EV shoppers fear the Trump administration will attack tax credits for purchasing or leasing EVs. Executive orders have already suspended the $5 billion National Electric Vehicle Infrastructure Formula Program, a.k.a. NEVI, which was set up to funnel money to states to build chargers along heavily trafficked corridors. With federal support frozen, it’s increasingly up to the automakers, utilities, and the states — the ones with EV-friendly regimes, at least — to pick up the slack.
Illinois’ investment has been four years in the making. In 2021, the state established an initiative to have a million EVs on its roads by 2030, and ComEd’s new program is a direct outgrowth. The new $100 million investment includes $53 million in rebates for business and public sector EV fleet purchases, $38 million for upgrades necessary to install public and private Level 2 and Level 3 chargers, stations for non-residential customers, and $9 million to residential customers who buy and install home chargers, with rebates of up to $3,750 per charger.
Massachusetts passed similar, sweeping legislation last November. Its bill was aimed to “accelerate clean energy development, improve energy affordability, create an equitable infrastructure siting process, allow for multistate clean energy procurements, promote non-gas heating, expand access to electric vehicles and create jobs and support workers throughout the energy transition.” Amid that list of hifalutin ambition, the state included something interesting and forward-looking: a pilot program of 100 bidirectional chargers meant to demonstrate the power of vehicle-to-grid, vehicle-to-home, and other two-way charging integrations that could help make the grid of the future more resilient.
Many states, blue ones especially, have had EV charging rebates in places for years. Now, with evaporating federal funding for EVs, they have to take over as the primary benefactor for businesses and residents looking to electrify, as well as a financial level to help states reach their public targets for electrification.
Illinois, for example, saw nearly 29,000 more EVs added to its roads in 2024 than 2023, but that growth rate was actually slower than the previous year, which mirrors the national narrative of EV sales continuing to grow, but more slowly than before. In the time of hostile federal government, the state’s goal of jumping from about 130,000 EVs now to a million in 2030 may be out of reach. But making it more affordable for residents and small businesses to take the leap should send the numbers in the right direction, as will a state-backed attempt to create more public EV chargers.
The private sector is trying to juice charger expansion, too. Federal funding or not, the car companies need a robust nationwide charging network to boost public confidence as they roll out more electric offerings. Ionna — the charging station partnership funded by the likes of Hyundai, BMW, General Motors, Honda, Kia, Mercedes-Benz, Stellantis, and Toyota — is opening new chargers at Sheetz gas stations. It promises to open 1,000 new charging bays this year and 30,000 by 2030.
Hyundai, being the number two EV company in America behind much-maligned Tesla, has plenty at stake with this and similar ventures. No surprise, then, that its spokesperson told Automotive Dive that Ionna doesn’t rely on federal dollars and will press on regardless of what happens in Washington. Regardless of the prevailing winds in D.C., Hyundai/Kia is motivated to support a growing national network to boost the sales of models on the market like the Hyundai Ioniq5 and Kia EV6, as well as the company’s many new EVs in the pipeline. They’re not alone. Mercedes-Benz, for example, is building a small supply of branded high-power charging stations so its EV drivers can refill their batteries in Mercedes luxury.
The fate of the federal NEVI dollars is still up in the air. The clearinghouse on this funding shows a state-by-state patchwork. More than a dozen states have some NEVI-funded chargers operational, but a few have gotten no further than having their plans for fiscal year 2024 approved. Only Rhode Island has fully built out its planned network. It’s possible that monies already allocated will go out, despite the administration’s attempt to kill the program.
In the meantime, Tesla’s Supercharger network is still king of the hill, and with a growing number of its stations now open to EVs from other brands (and a growing number of brands building their new EVs with the Tesla NACS charging port), Superchargers will be the most convenient option for lots of electric drivers on road trips. Unless the alternatives can become far more widespread and reliable, that is.
The increasing state and private focus on building chargers is good for all EV drivers, starting with those who haven’t gone in on an electric car yet and are still worried about range or charger wait times on the road to their destination. It is also, by the way, good news for the growing number of EV folks looking to avoid Elon Musk at all cost.