When the U.S. last auctioned big plots of ocean to companies that wanted to build offshore wind farms a few years ago, it raked in a then-record-setting haul of $405 million. That’s set to be obliterated Wednesday, when two dozen companies compete to bid on lease areas off the coasts of New York and New Jersey as the scramble to erect wind turbines all along the U.S. coast and decarbonize the nation’s electric grid heats up. 

The auction’s winners will secure the right to develop six lease areas in the New York Bight, a shallow stretch of the Atlantic Ocean between Long Island and New Jersey. They’ll make money selling clean electricity from about 500 towering wind turbines to the big cities onshore and play a part in displacing the coal and natural gas-fired power plants that currently speed climate change. 

Just as gold miners in centuries past charged to the best and most fertile pieces of land to claim a stake, wind farm developers are now rushing toward the windiest and most profitable tranches of ocean. 

“These waters are hot,” said Timothy Fox, vice president of ClearView Energy Partners, a Washington, D.C.-based energy research company. “We expect high bids, potentially the highest on record.” 

While the Trump administration only held two lease sales for offshore wind areas in four years, President Joe Biden has said he wants enough offshore wind farms to power 10 million homes by 2030 and is planning six more auctions from California to the Carolinas. According to Martha Kammoun, a lawyer at the firm Bracewell LLP, which advises offshore wind companies on lease auctions and development projects: “This is the beginning.”

Companies such as European giants Orsted A/S, EDF Renewables Development Inc. and Equinor ASA have registered to bid, along with smaller U.S. firms such as Invenergy Wind Offshore LLC, Arevia Power and Horizon Wind Power. The stakes are even higher since each company can only win one plot of ocean, under a new rule that could benefit U.S. wind developers that are accustomed to being shouldered aside by big European competitors. 

The dominance of foreign players reflects where the offshore wind industry started. With the help of government subsidies and purchase mandates, major wind projects have been erected alongside Scotland, the Netherlands, and China. Those large international developers have helped advance wind technology and reduce costs — a benefit as the industry builds in the U.S. — and at the same time amassed big balance sheets that could give them an advantage over smaller U.S. firms vying for tracts in the Bight. 

Experts say bids could top $3,000 an acre, which would put the total price tag for the almost 500,000 acres close to $1.5 billion. That would set the auction far above recent sales for oil and gas rights in the Gulf of Mexico, which have raked in a few hundred million dollars. Multi-billion-dollar oil and gas sales were more common in the 1980s and early 2000s, though, and the per-acre price for oil and gas areas is still well above even the higher estimates for Wednesday’s auction. 

Yet renewable companies bidding in this sale don’t bear the same risk as oil drillers. Oil companies can drill wells that turn up empty, but renewable firms know the wind is there. They just have to harness it. And they can count on guaranteed demand for their electricity from states such as New York and New Jersey that have enacted laws mandating offshore wind purchases. “Eliminating the need to discover the resource provides a much different investment scenario for offshore wind,” said Erik Milito, president of the National Ocean Industries Association. 

Now, oil companies that have decades of expertise pulling crude from coastal waters are turning their attention to wind. BP Plc and a division of the Norwegian oil giant Equinor are already jointly developing a wind farm near New York and have qualified as bidders for Wednesday’s auction.

Read more: America’s First Big Offshore Wind Farm Has Been Approved

Not everyone is excited about the prospect of hundreds of new turbines, each almost as tall as the Eiffel Tower, being planted in the Atlantic. The Bight is home to some of the world’s richest scallop beds, and commercial fishing associations have said the turbines would make it much harder to harvest the mollusks. Whale advocates and shipping companies have also questioned the sale, and a handful of lawsuits have been filed against the Interior Department’s recent wind approvals. 

There’s also another potential problem with a record-setting sale: power prices. Since developers will eventually be passing on the costs of building the wind farms to the homeowners and businesses that buy the electricity they generate, bidding wars and high prices for the tracts of ocean could eventually boost the price of that power. 

There’s a common phrase in the utility sector: “Everybody loves to be first to be second.” It means that going first can be dangerous, as shown with the death of Cape Wind, which was supposed to be the first big offshore wind farm in the U.S. but was killed in 2017 by a coalition that included the Kennedy family and billionaire industrialist William Koch. Wind developers learned an important lesson — don’t try to build wind farms that rich and powerful people would be able to see from their beach houses — and regulators adapted by moving plots further away from the coast and out of the view of those shoreside residents. 

The last time the U.S. auctioned off offshore wind lease areas, in 2018, the supply chain for turbines was less developed. It also wasn’t clear which ports could handle the massive turbines or increased ship traffic, and nobody had settled exactly how the electricity would get ashore. “Now those pieces of the puzzle are much clearer, so developers can move faster,” said Liz Burdock, who heads the Business Network for Offshore Wind, a nonprofit focused on building the U.S. offshore wind supply chain. 

Companies are preparing to build offshore wind all over U.S. waters as the federal government weighs lease sales near the Carolinas, California, Oregon and Maine, as well as in the Gulf of Mexico. And they know they’ll be competing against each other for space: “There aren’t infinite lease areas going down the East Coast,” said RJ Arsenault of FTI Consulting’s clean energy practice, who is advising one Bight bidder and estimates developers will spend more than $20 billion to develop wind farms there. “For any developer, it’s absolutely critical to secure one.”

Past auctions for offshore wind leases started with a minimum bid of $2 per acre. The minimum has risen to $100 per acre, which means the smallest plot of ocean would start at about $4.3 million. The Feb. 23 electronic auction is expected to unfold over as many as three days, with companies placing anonymous bids for any one of six available tracts in periodic rounds about a half-hour apart. Winners could then sell off their lease or partner with another company to form joint ventures that would build the wind farms. 

Companies have spent weeks studying the tracts — looking at their wind potential but also how they would get power to shore from each site — so they can shift bids from one lease to another during the auction, since they’re limited to winning only one.

The clamor for the Bight reflects surging interest in U.S. offshore wind since 2016, when the nation’s first such commercial facility, a 30-megawatt development near Block Island, R.I., went online. Developers are being lured to East Coast waters by near-guaranteed demand, as coastal states ratchet up commitments to buy renewable electricity and lay out specific targets for generation from offshore wind. New York has set a goal of 9 gigawatts of wind power by 2035, for example, and New Jersey plans to have 7.5 gigawatts by that point. 

“You have this cascade of states up and down the East Coast — and now starting in Louisiana — announcing these offshore wind procurement targets,” said Josh Kaplowitz, vice president for offshore wind at the American Clean Power Association. “All of them are sending a very clear signal to the market that if you build it, there will be a market for this energy.” 

Earlier this month Mads Nipper, the chief executive of Danish energy giant Orsted, looked out the window of a Manhattan hotel conference room onto an unseasonably balmy day. “We actually don’t mind when it’s warmer, because it’s windier,” he said with a chuckle.

Orsted already builds and operates offshore wind farms in Europe and Asia, is developing other projects along the U.S. East Coast, and plans to bid for the right to build in the Bight. The company has done for offshore wind what Tesla did for electric cars, Nipper said. “I’m super excited about the U.S.,” he said, adding that Orsted is also looking at wind and grid conditions in upcoming lease sales in the Carolinas, California and the Gulf Coast. “We will certainly be investigating all of those.”