Call it a victory for offshore wind on the East Coast! Block Island, off the coast of Rhode Island, cleared a major regulatory hurdle as it qualified for a vital federal tax credit by signing an agreement with Alstom to purchase turbines. Clean energy will now come to the grid quicker than previously anticipated, and we will be on our way to a long-term renewable energy source never before witnessed in the U.S.
The developer, Deepwater Wind, will produce a 30-megawatt wind farm by building five six-megawatt turbines. The purchase means that Deepwater has spent more than the five percent investment threshold the IRS created to secure “safe harbor” for the credit.
The investment tax credit, or ITC, would cover 30 percent of Deepwater’s costs if it is eligible. And Deepwater signed the contract just in time, inking the deal in December before the credit expired in January. News of the tax credit eligibility builds on the momentum in the offshore wind industry of late. Just last December, Maryland announced plans to hold a lease auction for the development of offshore wind off its coast, and New Jersey is expected to announce an auction later this year.
These efforts along the East Coast make it clear that renewable energies in the Atlantic have obvious advantages over offshore drilling. For example, offshore wind is further along in the permitting process, produces clean and renewable energy, reduces dependence on fossil fuels, and does not run the risk of a catastrophic oil spill.
Even more, the East Coast has been dubbed the "Saudi Arabia of offshore wind," except this resource remains mostly untapped. It’s time we start realizing this potential and reaping the benefits. Conservative estimates demonstrate that Atlantic coast states could generate over 127 gigawatts of clean, renewable energy, enough electricity to heat every home in the country, and then some.
And our offshore wind resources are not limited to just the Atlantic. The West Coast is well on its way to developing this clean energy. Just last week, Oregon was approved to develop its offshore wind resources with a 30-megawatt pilot project, and will be the first offshore wind farm to use floating wind turbine technology.
Looking forward, the time has come for the U.S. realizes this vast wealth of energy potential and capitalizes on American innovation and investment. Unfortunately, we lag far behind the rest of the world in developing this technology. Global production of offshore wind is around 4 gigawatts, with Europe comprising over 95 percent of that production. Just last year, Europe added over 1.5 gigawatts of power from new projects, and they continue to expand. China demonstrated a strong commitment to offshore wind last recently, with newly installed capacity increasing 24 percent in just one year.
If the U.S. wants to take advantage of our incredible wind resources, we need to create a more certain regulatory environment for the industry. The biggest obstacle to building new offshore wind farms is that developers do not know what credits they will be eligible for from year to year. And with projects that take many years to develop, this uncertainty can be devastating for the industry. Therefore, we need a long-term extension of ITC to allow companies to plan successful projects years in advance. Only then can developers operate efficiently to bring renewable energy, jobs, and revenue to coastal states.