Recently introduced legislation would create a 30% investment tax credit for the first 3 GW of offshore wind projects deployed in the U.S.
Justin Gerdes reports for GreenTechMedia:
When the U.S. was ready to ramp up its solar industry, developers benefited from investments made in Germany, Spain and elsewhere in Europe that had funded gigawatt-scale annual deployments and pushed down costs. The same could happen with offshore wind.
By the end of 2016, 14.4 gigawatts of offshore wind capacity had been installed globally, with nearly 90 percent of the total deployed in European waters. Prices for projects coming on-line from 2020 have fallen to $50 per megawatt-hour in Denmark, the Netherlands and Germany. The United States, meanwhile, has so far managed to bring on-line just one modest commercial project, the 30-megawatt Block Island Wind Farm off of Rhode Island.
A bill introduced this summer by a bipartisan group of senators aims to help the U.S. catch up with Europe. On August 1, 2017, Senators Tom Carper (D-Del.) and Susan Collins (R-Maine) introduced the Incentivizing Offshore Wind Power Act with 10 co-sponsors.
In a clever twist, the legislation trades a calendar deadline — typical for federal clean energy tax incentives — for a deployment target. The bill would create a 30 percent Investment Tax Credit (ITC) redeemable for the first 3 gigawatts of offshore wind projects placed into service in both coastal waters and inland navigable waters like the Great Lakes.
“Offshore wind energy has the potential to power every home, school and business from Florida to Maine with clean, renewable energy,” said Carper, in a statement. “I’m proud to partner with Senator Collins to provide this growing industry the certainty it needs to draw private sector investments in new offshore wind facilities across the country.”
Why the deployment target instead of deadline year? In short, project developers need more time to get more steel in the water. To take advantage of the existing federal tax incentive — developers can opt for either an ITC or a Production Tax Credit (PTC) — projects must commence construction before December 31, 2019.
Developer interest in the sector is strong. The Bureau of Ocean Energy Management has conducted seven competitive lease sales for wind energy development in federal waters since July 2013. In December 2016, a 33-round bidding war ended with a $42.5 million winning bid by Statoil Wind U.S. LLC to develop 79,350 acres off the shore of New York. But it is unlikely many of the offshore projects in the pipeline will be able to claim the federal ITC/PTC before the 2019 expiration. Sens. Carper and Collins cite the long development time required to build offshore wind as part of the justification for the legislation. “The ideal offshore winds are often found in federal waters — requiring federal permits and other logistical complications that can add years to the construction timeline,” they said in a statement. Read the entire story
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