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Offshore Wind Journal

State support drives US projects to a tipping point

Tue 16 May 2017 by David Foxwell

State support drives US projects to a tipping point

Earlier this month I reported how the US is – at last – on the cusp of commercial-scale offshore wind development, according to a report backed by consulting firm MAKE. It sees a growing role for offshore wind in the US wind energy market, with robust, state-level support on the country’s east coast driving the development of commercial-scale projects.

The analyst sees a significant difference in the drivers behind growth in wind power ashore and offshore in the US, with offshore wind an exception to economics-driven installation of wind power capacity in the post production tax credit (PTC) period. In late 2015, Congress voted to phase out the PTC over a five-year period.

“Supported by state-level policies in the northeast region, the first full-scale offshore projects will reach commercial operations beginning in 2021, and at least one new offshore wind development will be installed annually through 2026,” said MAKE in its 2017 North America Wind Power Outlook. Ultimately, it says, some 2.2 gigawatts (GW) of offshore wind will enter commercial operation in that period.

Since that early May report, further important steps have been taken, notably with Maryland Public Service Commission (PSC) awarding offshore wind renewable energy credits to two projects to be built off the coast of Maryland. The decision, announced on 11 May 2017, enables US Wind Inc and Skipjack Offshore Energy LLC to construct 368 megawatts (MW) of capacity.

The PSC’s decision to approve the first large-scale offshore wind project is an important one, but only one of a number of developments in the US. On 11 May, lawmakers in the US proposed tax credits to spur offshore wind energy, with Senators Ed Markey (D-Mass), Sheldon Whitehouse (D-RI) and Congressman Jim Langevin (RI-02) reintroducing legislation that would spur the growth of offshore wind energy in the country by extending tax credits for the industry.

The Offshore Wind Incentives for New Development (Offshore WIND) Act would extend the 30 per cent Investment Tax Credit (ITC) for offshore wind through 2025. The 2015 omnibus bill extended the Production Tax Credit and ITC for wind until 2019.

“The WIND Act puts the ‘win’ in wind energy,” said Senator Markey, a member of the Environment and Public Works Committee. “Offshore wind projects are a crucial part of America’s energy future. Offshore wind has the potential to create tens of thousands of jobs in Massachusetts and up and down the East Coast, encourage local innovation, and reduce carbon pollution. But to realise this potential, we need to provide this nascent industry the long-term certainty in the tax code that it needs.”

“I’m proud to say that America’s first offshore windfarm is powering Rhode Island homes and businesses with clean, renewable energy. Building the windfarm off Block Island has been a boost for our economy, and those turbines are already reducing our region’s carbon footprint,” said Senator Whitehouse, a member of the Environment and Public Works Committee. “This bill will extend an important investment tax credit to expand the benefits of offshore wind we’re enjoying in Rhode Island to coastal communities across the country.”

“Rhode Island has positioned itself as a leader in offshore wind with the Block Island Windfarm. By incentivising such projects, the Offshore WIND Act will encourage other states to follow Rhode Island’s example,” said Congressman Langevin, who serves as Energy Task Force Chair on the Sustainable Energy and Environment Coalition in the House of Representatives. “Clean energy is our nation’s future and we need a sustained commitment to investments in more efficient and sustainable energy solutions.”

A copy of the Offshore WIND Act can be found here. Other Senators co-sponsoring the legislation are Senators Jeff Merkley (D-Ore), Elizabeth Warren (D-Mass), Jack Reed (D-RI), Cory Booker (D-NJ) and Sherrod Brown (D-Ohio). Groups supporting the legislation include: League of Conservation Voters, NRDC, Environment America, Sierra Club, Oceana, Union of Concerned Scientists, Mass Audubon, Conservation Law Foundation.

Importantly, commercial interest from industry is also running at a high level. Industry leaders such as Dong Energy have been involved in the US for some time; now Innogy is also targeting the US market and has hired Chris Wissemann, a former chief executive at Fishermen’s Energy who also worked for Deepwater Wind and Winergy, to drive its offshore wind business in the country.

Only last week, Avangrid Renewables and Vineyard Wind formed a partnership to jointly develop a large wind energy project off the coast of Massachusetts. Avangrid Renewables is acquiring a 50 per cent ownership interest in Vineyard Wind, the offshore wind energy developer which is part of the Copenhagen Infrastructure Partners portfolio. Avangrid Renewables is a subsidiary of Avangrid Inc, itself part of Iberdrola, which has significant offshore wind holdings in Europe and owns 81.5 per cent of the outstanding shares of Avangrid common stock. 

As I highlighted earlier, recent weeks have seen a number of other important developments on the east and west coasts of the US, with Avangrid Renewables winning the 1.5 GW Kitty Hawk offshore wind lease auction off the coast of Carolina, a lease for which other European-led industry companies such as Statoil, Wind Future and WPD Offshore Alpha also competed.

The Bureau of Ocean Energy Management (BOEM) also recently held a ‘listening session’ to help inform future efforts relating to the next round of Atlantic offshore wind planning and leasing in the US. During the meeting, BOEM personnel provided an overview of a preliminary framework to help determine where future renewable energy leasing areas may be considered on the Atlantic Outer Continental Shelf. A similar meeting took place in California in April to enable BOEM to share information on planning activity for possible offshore wind development along the coast of the state.

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