‘Build Back Better Act’ Reaches US Senate Floor. Bill Would Mobilise Federal Funds to Back Offshore Wind Development

The Build Back Better Act, a comprehensive legislative package proposed in the US that also includes funding for governmental bodies to speed up offshore wind permitting and buildout, was introduced in the US Senate on 2 August.

Brave Tern Installing the fifth and final turbine on Block Island OWF. Source: Fred. Olsen Windcarrier (archive)

The package, which was first proposed to cost USD 3.5 trillion and later got cut to USD 1.7 trillion, passed the House in November last year.

After clearing the House, the bill, endorsed by the US President Joe Biden, has been said to have little hope of being passed by the Senate, primarily because Senator Joe Manchin, part of the same political corpus in the US that is pushing for the package, the Democratic Party, has voiced his opposition.

According to The Washington Post and CNN, Senator Manchin has opposed the climate and tax provisions, and cites the cost of the federal measure and the effect it could have amid inflation as the main reason of his opposition.

The proposed Act encompasses numerous areas of the US energy and economy, and is largely focused on the socio-economic impact, including facilitating job creation.

Billions to Support Clean Energy and Offshore Wind Permitting and Development

As for the provisions on offshore wind, the Build Back Better Act would make hundreds of millions of US dollars available to governmental bodies to optimise and accelerate the processes behind bringing projects to realisation.

The Department of the Interior would have USD 100 million available (until 30 September 2026) to “provide for the development of more efficient, accurate, and timely reviews for planning, permitting, and approval processes” at its agencies, including the Bureau of Ocean Energy Management (BOEM).

This covers the hiring and training of personnel, the development of programmatic documents, the procurement of technical or scientific services for reviews, the development of environmental data or information systems, stakeholder and community engagement, the purchase of new equipment for environmental analysis, and the development of geographic information systems and other analysis tools, techniques, and guidance to improve agency transparency, accountability, and public engagement.

Furthermore, the bill puts USD 100 million on disposal for the Secretary of Energy until 30 September 2031 to carry out activities related to the development of interregional electricity transmission and transmission of electricity generated by offshore wind.

The funding would cover the expenses associated with convening relevant stakeholders and conducting planning, modeling, and analysis regarding interregional electricity transmission and transmission of
electricity that is generated by offshore wind.

This also involves a planned national transmission grid, which would include a “networked transmission system” to optimise the existing grid for interconnection of offshore wind farms.

Until the same date, the Secretary of Energy would also have a total of USD 2 billion available for purposes of providing grants and direct loans to build new, or make upgrades to existing, transmission lines or eligible interties, including the related facilities.

The grants and loans would be provided if it is deemed that construction or upgrade of this kind of infrastructure would support a more robust and resilient electric grid, and the integration of electricity from a clean energy facility into the electric grid, such as an offshore wind farm.

Extension of Credits and Local Content Requirements

The bill also amends the law on credit for renewable energy sources and extends credit for electricity produced from certain sources, and also establishes an advanced manufacturing credit that includes offshore wind farm components.

Namely, the Production Tax Credit in the US for projects starting construction after 31 December 2021 has expired. The Build Back Better Act would extend the credit to projects beginning construction until 1 January 2027.

The legislation also addresses the domestic content requirement, which brings bonus credit, and in the case of offshore wind the content requirements would be as follows:

  • 20 per cent for offshore wind farms whose construction begins before 1 January 2025,
  • 27.5 per cent for offshore wind farms whose construction begins after 31 December 2024 and before 1 January 2026,
  • 35 per cent for projects on which construction starts after 31 December 2025 and before 1 January 2027,
  • 45 per cent for projects on which construction starts after 31 December 31 2026 and before 1 January 2028, and
  • 55 percent per cent for offshore wind farms whose construction begins after 31 December 2027.

Offshore Wind Leasing in US Territories

The Build Back Better Act also has a section dedicated solely to offshore wind, and it concerns the leasing on the Outer Continental Shelf (OCS) and the US Territories.

“Secretary of the Interior shall grant leases, easements, and rights-of-way, to produce or support production, transportation, or transmission of electricity from renewable energy facilities on the Outer Continental Shelf in the areas identified on the map entitled “Outer Continental Shelf Lower 48 States Planning Areas” and dated 18 October 2021, as the Mid Atlantic Planning Area, the South Atlantic Planning Area, the Straits of Florida Planning Area, and the Eastern Gulf of Mexico Planning Area”, the bill reads.

The legislative measure instructs the Secretary of the Interior to do the same for offshore wind projects in submerged lands seaward from the coastline of Puerto Rico, Guam, American Samoa, the Virgin Islands of the United States, and the Commonwealth of the Northern Mariana Islands.

Under the Build Back Better Act, the Department of the Interior is asked to carry out wind lease sales in these areas if it determines that a wind lease sale is feasible and issues a call for information and nominations, and concludes there is sufficient interest in leasing the area.

The Department would also need to consult with the Governor of the territory regarding the suitability of the area for wind energy development.

In December 2018, the US Senate received the Offshore Wind for Territories Act, a bipartisan legislation authorising offshore wind energy development in the exclusive economic zones adjacent to American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands.

The Act, which cleared the House the same year, was introduced as the Outer Continental Shelf Lands Act (OCSLA) does not allow the Secretary of the Interior to lease areas offshore US Territories for renewable energy development.

The legislation also guarantees the Territories receive a state-equivalent share of all royalty payments made to the federal government by offshore wind developers for projects in their respective Exclusive Economic Zones.

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There has been no further action on the bill in the Senate since, according to information on the US Congress website.

However, a bill under the same name and with same provisions was placed before the House last year.

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