US Governors Urge Trump to Adopt Long-Term Offshore Wind Policy

Block Island Wind Farm, the nation's only operational offshore wind farm. Source: Deepwater Wind.

A bi-partisan group of twenty US state governors has urged president Donald Trump to adopt a comprehensive offshore wind development legislation with a particular focus on a long-term extension of a thirty percent investment tax credit (ITC). 

In a letter to president Trump, the Governors’ Wind & Solar Energy Coalition cited the Department of Energy’s 2015 Wind Vision Report which predicted that the country’s offshore wind resources could support the installation of 22GW of new wind by 2030 and 86GW by 2050.

The American offshore wind industry could potentially create thousands of jobs in research and development, engineering, manufacturing, marine construction and other sectors, the letter states.

However, the coalition warns that, given its location, offshore wind presents greater development challenges than onshore wind, resulting in longer construction times and higher initial costs. On top of that, most of the nation’s best offshore wind resources are found in federal waters, requiring federal permits and other logistic efforts that can add years to the construction timeline.

It is for these reasons that the industry needs different tax incentives, infrastructure investments, and research in order to be a success, according to the coalition.

The governors have recently informed Congressional leadership that the nation’s offshore wind industry cannot grow without specific federal policy foundations that will encourage offshore wind development in shallow and deep water. The governors have also urged Congress to approve comprehensive offshore development legislation as soon as possible.

”Congress already has two pieces of legislation from last session that would address this issue. Bills authored by Senator Markey and Senator Whitehouse (S.3036) would extend the ITC for offshore wind through 2025 so the industry has sufficient time to develop these projects. Other legislation authored by Senator Carper and Senator Collins (S.1736) would allow the first 3,000 megawatts of offshore wind to qualify for the ITC, providing certainty for early developers regardless of timing. Both bills have companion legislation in the House. We support these efforts and other options that provide more certainty and time for the investment tax credit,” the coalition said in the letter.

The ITC is a better incentive for offshore wind development than the production tax credit (PTC), as offshore wind investors need a faster return on their long-term investments, the coalition states.

”Tax incentives for the first offshore wind projects will ultimately reduce costs for future projects and for consumers. In order for offshore wind to be successful, a long-term extension of a thirty percent investment tax credit is critical,” the letter said.

”Unfortunately, Congress has passed only short-term extensions of the investment tax credit that will expire before a majority of offshore wind projects will qualify. In fact, the National Renewable Energy Laboratory’s analysis of the impacts of the recent PTC and ITC extensions found that no offshore wind projects would qualify prior to the 2019 expiration date.”

The letter has warned that the ITC also phases down, which removes the effectiveness of the incentive.

The coalition believes that a strong national policy foundation is needed in order to maintain a strong investor confidence in the nation’s offshore wind potential, as demonstrated by the recently completed federal auction for the offshore lease area off New York where six global companies competed for the 79,350-acre area, with Norway’s Statoil winning with a USD 42.5 million bid.

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