Sen. Thomas R. Carper, D-Del., has led the charge in Congress to give prospective developers greater tax certainty. He has proposed leaving the 30 percent investment credit in place for the first 3,000 megawatts of offshore wind power produced, giving developers five years to get a facility into the water. That model is intended to offer certainty for developers and an expiration date for budget hawks.
“This is a way that allows not even having to go year-to-year to the tax-writing committees,” said Jim Lanard, president of the Offshore Wind Development Coalition.
Carper, who is expected to reintroduce the legislation with Maine Republican Susan Collins as early as this week, says the significance of tax policy to growing the industry isn’t likely to change anytime soon, given historically low natural gas prices that have edged utilities away from coal but prevented most from committing more forcefully to renewables.
“If the price of natural gas stays low, then the tax policy and providing certainty and predictability becomes all the more important,” he said.
The Energy Department also is working to propel projects beyond the research-and- development stage, leading a competitive demonstration program that will fund up to three finalists to advance their wind farms to the commercial stage by 2017.
The federal government alone can’t persuade developers to commit to the long lead times and high capital costs associated with offshore wind farms. States play an integral role in creating markets for the power, and a few are moving closer to making that happen.
New Jersey passed a law in 2010 to spur the creation of a renewable-energy certificate program requiring a percentage of the power sold within the state to be derived from offshore wind. The state could be poised to accept bids for utility-scale wind farms later this year.
Legislation that would subsidize wind projects off the Maryland coast by requiring utilities to purchase offshore energy credits — and later charging ratepayers up to $1.50 per month — is winding its way through the state legislature after failing twice before.
“The states have to be comfortable that this policy works for the residents of that state, and that evaluation is almost always going to be made on economic development, job creation and manufacturing opportunities for the state,” Lanard said.
But the effort must go beyond states for the industry to take hold in the United States, said John Cohen, vice president of government affairs at Alstom, an energy generation and infrastructure conglomerate. Stakeholders in the public and private sectors must coordinate to create a large regional market that would fully realize the potential of offshore wind as a power source, he said.
“One of the challenges here is the market to really draw in the full potential of economic development is bigger than any one state,” Cohen said.
The recession, low natural gas prices and reduced power demand have all contributed to the industry’s slow crawl to commercial viability, said Frank Maisano, an energy specialist at Bracewell & Giuliani. But given the support for offshore wind among government officials and the public, he says the nascent industry can overcome the obstacles.
May 24, 2013, 11:56 a.m.
May 23, 2013, 10:49 a.m.
May 22, 2013, 7:35 p.m.