After the conclusion of the historic two-day auction of three leases for floating offshore wind energy development in the Pacific Ocean near San Luis Obispo County, there are key next steps in the process before the turbines are built.

Collectively, the three leases that span about 376 square miles of the ocean about 20 miles offshore of Cambria and San Simeon sold for $425.6 million at a maximum of $1,869 per acre, according to the U.S. Bureau of Land Management (BOEM), the federal entity in charge of the project.

BOEM estimates the Morro Bay wind energy area has the capacity to produce up to 2.9 gigawatts of clean electricity, however companies that won the bids garner they can install enough to double that.

It was the United States’ first auction for floating wind energy projects, with fixed-bottom installations already in the works on the East Coast.

It was also the United States’ first offshore wind energy auction where bidders could qualify for a percentage off their winning bid if they showed a commitment to entering into agreements with communities, industries and tribes that have historically used and benefited from the ocean space set for the offshore wind energy development.

These “community benefits agreements” require the winning entities to engage with the local community and attempt to offset negative impacts from the offshore wind energy development.

Long Process Ahead Before Wind Turbines Put in the Water

Before the entities who won leases in the Morro Bay wind energy area can start constructing wind turbines, however, they must wait for BOEM to issue them an official lease. That could take a few months.

After that, the entities must then draw up and submit their site assessment plans to BOEM within one year. These are plans that outline how they plan to survey their lease area — likely including the deployment of ocean monitoring buoys and other equipment — so they can accurately assess how they will construct a wind energy development.

Then, BOEM must run through the federal review process to ensure those site assessment plans won’t cause undue damage to the ocean environment.

The entities then have up to five years to conduct assessments and then draw up their construction and operations plan, which BOEM and state entities must evaluate.

Developers ‘Excited’ About Offshore Wind Energy Development Potential

Despite the long road ahead, the entities who won leases in the Morro Bay wind energy area expressed their joy at securing the rights to submit plans to BOEM.

“We’re really just delighted to have won,” said Ocean Winds North America CEO Michael Brown in an interview. “And now we’re looking forward to moving this project forward.”

Brown noted that Ocean Winds was particularly attracted to bidding on the Morro Bay wind energy lease because it has close proximity to energy demand and the early availability of onshore transmission infrastructure.

Ocean Winds, owned by Danish energy company Orsted, formed a joint venture with the Canada Pension Plan Investment Board to create Central California Offshore Wind LLC and win one of the two 80,418-acre leases with a bid of $150.3 million.

Chicago-based Invenergy won the second 80,418-acre lease in the Morro Bay wind energy area with a bid of $145.3 million.

“We are thrilled to be a provisional winner in BOEM’s first offshore wind energy lease sale on the West Coast,” wrote Joshua Weinstein, vice president of offshore wind development at the company, in a statement to The Tribune.

“Invenergy is at the forefront of clean and renewable energy development, and we look forward to bringing our experience to the California coast.”

And Equinor, a Norwegian petroleum refining company, is furthering its investment into renewable energy by winning the 80,062-acre lease with a bid of $130 million.

“Equinor is optimistic about the outlook for offshore wind here on the West Coast, which we believe is one of the most attractive growth regions for floating offshore wind in the world,” wrote the company’s senior communications manager, Lauren Shane, in an email to The Tribune.

“We’re excited to have secured a lease in the Morro Bay area, which is attractive due to its location in the vicinity of large load centers (port facilities) in California” and “very good wind speeds,” Shane added.

Both Equinor and Ocean Winds have installed two of the very few floating offshore wind energy turbines in projects around the world. However, those projects are much, much smaller than the Morro Bay leases they won.

“Through Hywind Scotland we further demonstrated the viability of floating technology and that floating wind farms can be much, much larger,” Shane wrote about Equinor’s floating offshore wind energy project. “We’ve also learned the need to build projects at scale to deliver cost efficient renewable energy to benefit customers.”

Offshore Wind Developers to Engage Local Community in Development Process

Equinor and Ocean Winds expressed they had qualified for the bidding credits offered in the auction. This means they will get up to 25% off their winning bid should BOEM find they indeed qualified.

A 20% credit will be applied for the bidders who committed a monetary contribution to programs or initiatives that support workforce training programs for the floating offshore wind industry, the development of a U.S. domestic supply chain for the floating offshore wind energy industry, or both.

Another 5% credit can be applied for bidders who committed to entering community benefits agreements. This 5% credit was an entirely new concept implemented in the California auction, and one that the entities have said they believe is valuable, and that BOEM said it will likely continue in future auctions.

The community benefit agreement bidding credit was unique to the California auction in large part because of the early work by Alla Weinstein at Trident Winds, which was the company to submit an unsolicited lease request for floating offshore wind off San Luis Obispo County’s coast in 2016 — essentially jumpstarting the West Coast’s venture into the industry.

Castle Wind, Trident Winds’ joint venture with TotalEnergies, bid for a lease in the Morro Bay wind energy area, but was ultimately unsuccessful, Weinstein told The Tribune. It will now focus its work on potentially developing floating offshore wind energy in Washington, she added.

“Trident Winds is proud of the work we did to initiate development of the offshore wind market in California,” Weinstein wrote in an emailed statement.

“From those early days, Trident Winds established itself as a leader in the development of a new offshore wind industry that recognizes all voices must have a seat at the table and ensures an equitable distribution of benefits to affected stakeholders. This led to the establishment of a Community Benefits Agreement with the City of Morro Bay, the creation of a Mutual Benefits Corporation with the Central Coast fishing community, and more importantly, a multi-factor auction structure that incentivized other developers to make the same commitments.”

Ocean Winds’ Brown noted that his company is certainly eager to ensure the local communities and businesses have a seat at the table as the floating offshore wind energy development project moves forward.

“We are an offshore wind developer, our ultimate aim is to build sustainable, solid offshore developments,” he said. “And that comes with working with our stakeholders.”

Some of those stakeholders — including the California State Assembly, counties of San Luis Obispo and Santa Barbara; the cities of San Luis Obispo, Morro Bay, Grover Beach, Goleta, Santa Barbara and Arroyo Grande; Cal Poly, Cuesta College, Allan Hancock College, San Luis Coastal Unified School District and several chambers of commerce — penned a letter to each of the auction winners on Wednesday.

The letter voices their collective support for the floating offshore wind industry and encourages the developers to take advantage of the Central Coast’s existing regional workforce and educational institutions.

They also note that the developers should invest in scaling up the local port infrastructure and conduct environmental research (utilizing the local educational institutions for this work) on the impacts the floating offshore wind energy developments may have on the ocean.

“The Morro Bay wind energy area will be the first and largest commercial scale floating offshore wind project in the United States,” the letter said.

“Our region is eager to partner to advance the frontiers of this new technology while also assessing and mitigating the environmental, social and other impacts of offshore wind. As a global engineering and environmental research and development leader, we welcome exploring partnerships to advance offshore wind innovation, and ensure that these projects set a model and provide lessons for other offshore wind initiatives in California and worldwide.”