As the first-ever offshore wind auction takes place in the U.S. Gulf of Mexico, the emerging offshore wind industry is considering the event as a catalyst for the development of a green hydrogen supply chain, rather than just a traditional power generation opportunity.

The auction, scheduled for August 29, 2023, is a departure from previous federal offshore wind lease sales, which were predominantly conducted in the Northeast. In the Gulf, the focus is not solely on integrating into the power grid, but also on creating innovative solutions to supply green hydrogen for the region's industrial needs.

Green hydrogen, produced by electrolyzing water using renewable energy, offers a low-emission alternative for industries and transportation, contributing to decarbonization. The U.S. Gulf Coast, known for its oil and gas infrastructure, is uniquely positioned to transition to green hydrogen production and usage, leveraging existing port and pipeline facilities.

While the Gulf auction may not generate the same level of bids as previous sales in the Northeast, it presents an opportunity for offshore wind companies to explore the synergies between offshore wind energy and green hydrogen production. Tax credits for hydrogen in President Biden's Inflation Reduction Act are making the pairing of offshore wind and hydrogen more appealing, potentially driving revenue diversification for wind developers in the Gulf.

Although the Gulf region lacks state-level mandates for renewable energy procurement, the integration of offshore wind and green hydrogen could find favor among industries seeking to reduce their carbon intensity. This strategic convergence aims to leverage the Gulf's existing industrial infrastructure to create a viable and substantial green hydrogen supply chain, even in an environment where renewable energy development might otherwise face challenges.