The governors of six northeastern US states, which are at the forefront of offshore wind development, have written to US President Joe Biden, calling for prompt federal action to support the progress of offshore wind projects in alignment with the US government’s goal of 30 GW of offshore wind by 2030.
The governors warn that near-term projects are increasingly at risk of failing as challenges, including inflationary pressures, Russia’s invasion of Ukraine and lingering supply chain disruptions from the pandemic, affect both the states’ procurements of new offshore wind and previously procured projects. They outline three demands, namely updating Treasury Guidance, establishing a revenue sharing programme and expediting clean energy permitting.
“We urgently request updated guidance from the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) to ensure offshore wind projects are fully eligible for federal clean energy tax credits, including the Domestic Content and Energy Community Bonus Credits to the Investment Tax Credit (ITC) and Production Tax Credit (PTC), under the Inflation Reduction Act of 2022 (IRA),” the letter, dated September 13, reads. This guidance should ensure that offshore wind projects can qualify for the bonus tax credits and that the ITC covers all project components, including the transfer and power conditioning equipment and land-based distribution and transmission.
The governors also call for redirecting part of the revenue from offshore wind leases back to the proximate states, which is a change proposed by the bipartisan Reinvesting in Shoreline Economies and Ecosystems (RISEE) Act. Currently, all of the lease revenue beyond state waters goes to the US Treasury.
“The lease revenue is a cost to offshore wind developers, meaning that States’ electricity ratepayers will bear the cost of leases for projects that ultimately interconnect into States’ electric grids,” the governors say.
The American Clean Power Association (ACP) on Friday said it echoes the six governors’ call.
“This letter comes at a pivotal time, with the industry seeking to scale up rapidly but meeting headwinds due to inflation, supply chain constraints and permitting delays,” said ACP chief executive Jason Grumet.
The organisation will continue working with the Biden administration to fully deploy the tools provided by the IRA and address bottlenecks in the federal permitting process, Grumet added.
The current obstacles have seen some offshore wind projects scrap their contracts and others looking to renegotiate. Rhode Island Energy, meanwhile, in the summer turned down the only bid it received in response to its request for proposals (RfP), soliciting 600 MW to 1,000 MW of offshore wind, due to affordability concerns.
The letter is signed by the governors of Connecticut, Maryland, Massachusetts, New Jersey, New York and Rhode Island.
