Some U.S. offshore wind energy development may be ready to accelerate again now that the federal government has renewed a key tax incentive.
As part of the “fiscal cliff” agreement in January, Congress and the Obama Administration agreed to continue the investment tax credit for offshore renewable energy projects. A previous version of the tax credit had expired, triggering concerns that construction of offshore wind farms would be delayed or canceled.
The extension of the investment tax credit for offshore wind project construction allows wind projects under construction, rather than in service, to receive the credit.
The offshore wind industry is positioned to create thousands of jobs for manufacturing, construction, operation and maintenance of utility-scale wind farms. While wind farms in Europe have been in place for some 20 years, the U.S. is just coming around to offshore wind and an extension of these tax incentives will help, the Offshore Wind Development Coalition said in a statement. The extension will be a short-term catalyst mostly for smaller wind projects.
“By extending the incentive for offshore wind, Congress has guaranteed that a few projects already close to construction will remain financially viable to begin construction in 2013,” said Matthew Stepp, senior policy analyst at the Information Technology and Innovation Foundation.
“But the incentive will not spur a large-scale movement to construct big offshore wind fields,” he said, “because it’s only for one year and offshore wind still faces a number of significant barriers to deployment — namely cost, high-voltage transmission and siting. So expect smaller projects — less than 1,000 MW, ready to break ground to move forward.”
Three offshore wind projects are slated to begin soon, all in the Northeast. The Cape Wind project, located on Horseshoe Shoal in Nantucket Sound off Cape Cod, Mass., is to commence construction in 2013. The Fisherman’s Energy project, located 2.8 miles offshore of Atlantic City, N.J., also is slated to start this year. Deepwater Wind, located in Rhode Island waters, five miles off Block Island, is scheduled to begin construction in 2014.
Marine jobs will be created on vessels that support the offshore construction, said Cape Wind spokesman Mark Rodgers. Vessels will be built and utilized to ferry workers and supplies to the construction site. In addition, on-site vessels will take up mooring at the construction site for berthing and messing of the construction crew. Workboats, tugs, jacking rigs, barges and cable-laying vessels are among the craft that will need to be available and crewed to complete construction, Rodgers said.
Cape Wind expects to create as many as a thousand jobs in assembly and ocean construction. Rodgers said additional economic development which will create jobs come from port development. Nearby ports and land-based support operations will require new personnel during the construction phases and to sustain the turbine farms once construction is completed. Cape Wind expects to create approximately 150 new jobs after construction to sustain its offshore assets. The New Bedford Port Terminal, for example, is being built in New Bedford, Mass., specifically to support the Cape Wind project.
The wind developers, who say they don’t know exactly how many vessels will be needed, still have not proclaimed the number of maritime jobs they expect to create.
“It’s hard to put numbers to how building an offshore wind farm in the United States will impact marine construction because the U.S. hasn’t built one yet,” Stepp said. “As a result, predictions of the overall economic impact of construction vary wildly. … Because the individual vessels required to construct a offshore wind turbine must be significantly large, costly and capable of craning the turbine foundation and blade system, it may be that one vessel is needed to build one turbine with additional support vessels for running underwater transmission lines (and) anchoring the turbine to the sea floor.”
