Six Governors on the US East Coast with big plans for offshore wind have appealed to President Biden for Federal action to help resolve problems offshore wind projects there are facing
In a letter to President Biden, Governors Kathy Hochul of New York, Ned Lamont of Connecticut, Wes Moore of Maryland, Maura Healey of Massachusetts, Phil Murphy of New Jersey and Daniel McKee of Rhode Island said federal action is urgently needed to ensure offshore wind projects can move forward in the current economic environment.
“As governors of states leading on offshore wind development, we strongly support your goal of building 30 GW offshore wind power by 2030,” said the Governors in their letter to the President.
“Development of a domestic offshore wind industry will create thousands of jobs, provide a robust source of clean energy, strengthen grid reliability, and reduce the planet-warming emissions driving climate change. Through our procurement authorities, states are responsible for 100% of the commitments to build offshore wind in the US to date, secured by contracts backed by ratepayers.
“Unfortunately, inflationary pressures, Russia’s invasion of Ukraine, and the lingering supply chain disruptions resulting from the Covid-19 pandemic have created extraordinary economic challenges that threaten to reverse these offshore wind gains.
“Instead of continued price declines, offshore wind faces cost increases in orders of magnitude that threaten states’ ability to make purchasing decisions.
“These pressures are affecting not only procurements of new offshore wind but, critically, previously procured projects already in the pipeline. Absent intervention, these near-term projects are increasingly at risk of failing.
“Without federal action, offshore wind deployment in the US is at serious risk of stalling because states’ ratepayers may be unable to absorb these significant new costs alone.
“We respectfully request your support for three actions from your administration: updating Treasury Guidance, establishing a revenue sharing programme and expediting clean energy permitting.”
The Governors have urgently requested updated guidance from the Department of the Treasury and the Internal Revenue Service 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, under the Inflation Reduction Act of 2022.
They want this guidance to ensure that offshore wind projects, including near-term projects, are able to move forward in the current economic climate by providing achievable pathways to qualify for the bonus tax credits and ensuring that the ITC is available for all project components, including the transfer and power conditioning equipment needed to bring offshore wind power to land as well as associated land-based distribution and transmission needed to interconnect these projects.
The Governors also want to establish a revenue sharing programme. Current federal law requires that all revenue generated from offshore wind leases beyond state waters be returned to the Treasury, leaving ratepayers to bear the brunt of the development costs for these critical projects. 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. A portion of these revenues should be redistributed back to the states that bear these costs, as proposed by the bipartisan Reinvesting in Shoreline Economies and Ecosystems Act, the Governors suggest, noting this legislation recognises “the critical role states play in advancing offshore wind.”
The East Coast Governors also want Federal action to speed up permitting. “Slow permitting timelines have the potential to severely limit our ability to grow the clean energy economy at the pace necessary to meet the decarbonisation goals science requires,” they said. “As we work to expedite offshore wind projects to meet our shared goals, we ask that you work with your agencies to ensure permitting processes are expedited and streamlined for these projects to avoid unnecessary cost increases and unlock the full potential of the clean energy economy.
“In short, we urgently need prompt federal action to ensure States can move forward now with offshore wind projects that will deliver significant domestic manufacturing, labour and community benefits for both current and future generations,” the letter concludes.
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