Concerted efforts to jump-start development of an offshore wind energy industry on the part of the Obama Administration, state governments and private-sector players are beginning to bear fruit. Now, a U.S. Senator is looking to revive an wind tax credit for investors that will generate significant forward momentum toward realizing that objective.
Sen. Tom Carper (D-Del.) intends to reintroduce legislation that would offer a 30 percent investment tax credit (ITC) for a limited number of offshore wind power projects, according to a report from The Hill.
Carper and co-sponsor Sen. Olympia Snowe (R-Maine) originally submitted a bill during the previous session of Congress that called for the enactment of an ITC that would have reimbursed developers for up to 30 percent of offshore wind power project costs, according to The Hill’s report. The bill would have capped the ITC at 3,000 megawatts (MW) of combined offshore wind power generating capacity.
A jump-start for U.S. offshore wind?
Carper and Snowe’s original bill, unsurprisingly, met stiff resistance from Republicans and self-proclaimed fiscal conservatives who believe “the federal government should not be in the business of jump-starting nascent industries through subsidies, especially in light of the growing federal deficit,” The Hill’s Zack Colman recounts. Of course, that conveniently ignores the billions of actual and de facto federal government subsidies for long-established oil, gas and coal sector companies that in no way, shape or form can be considered nascent.
The U.S. is playing catch-up when it comes to developing offshore wind power generation capacity and a new industry capable of creating substantial amounts of jobs, personal income and tax revenue for decades to come. China and the European Union, in particular, are both well ahead of the U.S. when it comes to offshore wind energy.
More than one offshore wind turbine was installed per working day in European waters in 2012, bringing the total to 1,662 in 55 offshore wind farms spanning territorial waters of ten European countries, according to year-end data compiled and presented in a European Wind Energy Association report released January 28. Installation of 293 offshore wind turbines with a total rated capacity of 1,165 megawatts (MW) represents a 33 percent increase from 2011, when offshore wind turbines with a total rated capacity of 874 MW were installed.
In stark contrast, not one offshore wind turbine has been installed in U.S. waters despite the tremendous potential for wind energy along the U.S.’ extensive coastlines. A Stanford University research team estimated that there’s enough potential energy in U.S. Atlantic offshore winds to power the entire East Coast, enough clean, renewable energy to meet fully one-third of the country’s electricity demand.
Despite staunch opposition in Congress, the Obama Administration, along with state governments and private offshore wind project investors, has been working to lay the scientific, engineering and institutional framework for accelerated offshore wind energy development, however. If passed, Sen. Carper’s bill would provide another substantial boost.
The Department of Interior and Bureau of Ocean Energy Management (BOEM) awarded a lease late last October to NRG Bluewater Wind Delaware LLC, the first completed under Interior’s “Smart from the Start” initiative, which aims to streamline and facilitate development of environmentally responsible offshore wind development along the Atlantic Outer Continental Shelf (OCS).
The federal OCS lease grants the corporation exclusive rights to submit one or more plans to BOEM to conduct activities in support of offshore wind energy development spanning 96,430 acres some 11 nautical miles off the coast of Delaware, the Interior Dept. explains in a press release.
Elsewhere, along the U.S. Atlantic coast, the Atlantic Wind Connection Jan. 14 announced that it had selected New Jersey for the first phase of a project that entails laying a high-voltage, direct current (DC) electricity transmission backbone under the U.S. Atlantic seabed that would stretch from New York City to Virginia.
With high-profile backers including Google, Marubeni, Bregal Energy and Elia, independent transmission company Trans-Elect and Atlantic Grid Development are AWC’s project developers. With a planned capacity of 3,000-megawatts (MW), the so-called New Jersey (NJ) Energy Link is to extend the length of the Mid-Atlantic state, linking offshore wind energy resources and consumers in northern, central and southern Jersey.
Better luck the second time around?
Taking essentially the same form as the bill he and Sen. Snowe introduced last session, the reintroduced bill is likely to generate equally vociferous opposition this time around, particularly in light of ongoing debate and controversy over this fiscal year’s federal budget and deficit.
Carper didn’t reveal a timeline for the bill’s reintroduction to reporters, but he did comment on the resistance likely to be encountered.
“We’ve been trying to get that done. As it turns out, when [the Congressional Budget Office] prices that — they score that — it’s not cheap. And so pretty high score, hard to get it done,” Carper said during an event hosted by the Center for American Progress Action Fund in Washington, D.C.
Carper has changed the language of the bill to limit the ITC to projects that would begin this year rather than actually begin producing electricity. This modification mirrors the one way written into a bill that extended the onshore wind energy production tax credit, part of the American Taxpayer Relief Act of 2013 that avoided the U.S. going over the so-called “Fiscal Cliff.”
Even so, lack of certainty as to how to interpret the bill’s language, as well as its limited size and duration, means it’s unlikely to generate investments capable of reaching the 3,000 MW cap on qualifying offshore wind energy projects. Nonetheless, passage of Carper’s offshore wind energy ITC bill “would still be a boon for the U.S. offshore wind industry,” The Hill quoted an energy and tax attorney who attended the event in D.C.