Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Economy

Texas Just Scared Away Wind Power in the Gulf of Mexico

The Biden administration’s historic auction went even worse than expected on Tuesday. Here’s why.

•
A boot stomping wind turbines.
Heatmap Illustration/Getty Images

The Biden administration’s historic auction for the rights to develop offshore wind in the Gulf of Mexico on Tuesday morning was something of a flop. Developers were even more hesitant to invest than expected, and no one wanted to be the first to try and build wind farms off the coast of Texas.

Though sixteen companies showed interest in the sale, only two participated, and the event was over after just two rounds of bidding. Both companies vied for a lease area near Lake Charles, Louisiana, with RWE, a German multinational energy company, making the winning offer of $5.6 million, or about $54 per acre. Two other leases for sale near Galveston, Texas, were rejected entirely.

It’s been a rough few months for the offshore wind industry. Projects underway in the Northeast are struggling to fight misinformation about whale deaths and facing higher costs than expected due to high interest rates, inflation, and supply chain issues.

Get one great climate story in your inbox every day:

It’s possible those challenges played into Tuesday's lackluster sale in the Gulf, where the business case for developing offshore wind energy is already relatively uncertain. The region experiences lower wind speeds than the East Coast, but infrastructure must also be fortified to withstand regular hurricanes. Texas and Louisiana also have relatively low electricity rates, which will make it harder for offshore wind projects to compete for utility contracts.

But these factors don’t entirely explain the response. An auction held in December for the rights to develop floating offshore wind farms off the coast of California — another economically challenging prospect — played out over 31 roundfs as companies vied for five lease areas. They sold for an average of $2,061 per acre.

The lack of interest in the two Texas areas may have more to do with politics than the Gulf’s unique weather. The state has not put forward any goals or intentions to procure electricity from offshore wind projects or otherwise support the industry. In fact, Lone Star lawmakers have become increasingly hostile to the idea in recent months. Republican state Senator Mayes Middleton sponsored a bill earlier this year that would allow the Texas General Land Office to deny permits for transmission lines to connect offshore wind projects to the state’s grid.

In July, Middleton criticized the Biden administration’s “wind boondoggle” on X (formerly Twitter), writing that it “puts nearly $900 billion of ship channels economic impact at risk and will destroy grid frequency in our grid,” and vowed to “re-file the bill to stop it.”

Texas Land Commissioner Dawn Buckingham jumped into the conversation, noting that she has “serious concerns” about offshore wind development near Galveston. “Texans deserve reliable and dispatchable energy.”

In mid-August, a member of Texas’ Railroad Commission, the agency that regulates the oil and gas industry, penned a letter to Buckingham and Governor Greg Abbott urging them to “stop President Biden’s offshore wind farms from invading the Gulf of Mexico, which endanger our Gulf Coast by harming delicate ecologies and vital industries and further cripple our electrical grid with more unreliable power.”

These views are supported by the Texas Public Policy Foundation, an influential conservative think tank based in Austin that receives millions of dollars from fossil fuel interests and has a history of opposing efforts to fight climate change. The group has already attempted to sue the Biden administration over Vineyard Wind, an offshore wind project under development near Massachusetts, claiming it would harm the commercial fishing industry.

Bo Delp, executive director of the Texas Climate Jobs Project, a nonprofit that works with unions in Texas to make sure new clean energy industries create good jobs, told me the group blames Texas lawmakers for scaring away developers. "State leadership is really failing Texans by antagonizing this new industry," he said. "It is just a total abdication of leadership, from our perspective, while Texas is struggling to keep the lights on, to undermine the certainty for this really critical industry to create electricity and stabilize our grid."

Louisiana, on the other hand, has been more welcoming. The state has a Climate Action Plan that recommends the procurement of 5,000 megawatts of offshore wind energy by 2035. It has already opened up state-controlled waters to developers, with at least three offshore wind projects in the pipeline.

“The Lake Charles area being of the most serious interest is an indicator that states stepping up to create a market is important,” Jenny Netherton, a senior program manager at the Southeastern Wind Coalition, told me on Tuesday morning after the auction closed. The coalition is made up of nonprofits and energy companies. “Offshore wind needs stable offtake mechanisms to support development and while Louisiana has made progress in this area, work still remains.”

The Biden administration claimed the Gulf sale as a win for Bidenomics, touting the 1.24 gigawatts of offshore wind energy capacity that could be generated when RWE develops its holding, which it said could power nearly 435,400 homes.

“The Biden-Harris administration is making once-in-a-generation investments in America’s infrastructure and our clean energy future as we take steps to bring offshore wind energy to additional areas around the country,” said Secretary of the Interior Deb Haaland in a press release.

The Bureau of Ocean Energy Management did not respond to an inquiry about why there was no interest in the Galveston lease areas and whether the agency might re-list them in a future auction.

Read more about wind power in the Gulf:

The Gulf of Mexico Is a Very Hard Spot to Build a Wind Farm

Editor's note: A previous version of this article misstated the purview of Texas’ Railroad Commission. It has been corrected. We regret the error.

Yellow
🔒

You’ve reached your free article limit

Subscribe to Heatmap News for unlimited access to daily energy and climate coverage.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Daily Briefing

The Senate Permitting Deal Contains a Data Center Double Tap

The bill would let states and utilities discriminate against data centers and crypto miners, requiring them to pay higher rates to cover the full cost of any system upgrades.

A data center.
Heatmap Illustration/Getty Images

Call it the data center double tap.

A wonky set of provisions in the Senate’s bipartisan permitting deal would rewrite federal electricity law to allow states and utilities to discriminate against artificial intelligence data centers and crypto miners for the first time.

Keep reading...Show less
Blue
Technology and permitting reform.
Heatmap Illustration/Getty Images

There’s seemingly plenty to celebrate in the Senate’s new 400-plus-page permitting reform bill, the Bipartisan American Affordability and Jobs Act, or BAAJA. The headline benefit — and the one drawing the most praise from energy hawks — is that expediting the buildout of energy infrastructure and transmission lines ought to bring tons more zero-carbon energy online. No doubt it will speed up fossil fuel projects as well, but modeling shows that renewables like wind and solar are disproportionately held back by the notoriously contentious and slow planning and permitting processes the bill seeks to overhaul.

Old-school renewables aren’t the only technologies that stand to benefit from BAAJA, however.

Keep reading...Show less
Green
AM Briefing

A Permitting Hallelujah

On Korean reactors, California plug-in solar, and Europe’s green steel champion

Announcing a permitting reform bill.
Heatmap Illustration/Getty images

Current conditions: Floodwaters from the remnants of Hurricane Polo breached a 20-foot dam in southern New Mexico, forcing evacuations • The Pacific’s active hurricane season continues as Hurricane Rachel threatens dangerous rip tides off Baja California • Further north in the Pacific, Tropical Storm Choi-wan is headed toward the Northern Mariana Islands.


THE TOP FIVE

1. The permitting reform omnibus just dropped

It’s 417 pages — or, for those of you who think in such terms, roughly two-and-a-three-quarters the length of a standard environmental impact statement. And it the landed yesterday with much fanfare. The Senate’s grand compromise on permitting reform, dubbed the Bipartisan American Affordability and Jobs Act, or BAAJA, is packed with sweeping changes that promise to upend how data centers are built, whether transmission lines get constructed at all, and speed up deployments of all kinds of energy infrastructure. My colleagues — there are five bylines on this sucker, if you have any doubt about how seriously Heatmap is taking this — have a dense and comprehensive explainer here.

Keep reading...Show less
Blue