Democrats to push for offshore wind tax-breaks: Senator

Party to back tax credits extension if it regains power in forthcoming elections, says Edward Markey

Democrats will push for an extension of federal renewable energy tax credits for offshore wind if they regain power in Washington DC in upcoming elections, says US Senator Edward Markey of Massachusetts.

Markey, a liberal Democrat, introduced legislation last year that would extend the 30% investment tax credit (ITC) to any offshore project that begins construction by the end of 2025. The bill – known as the Offshore WIND Act – stood no chance of passing under the current Republican-controlled Congress.

But its odds might shorten under a different Congressional configuration. Most analysts expect the Democrats to retake the House of Representatives in the mid-term elections in three weeks, with Republicans favoured to hold the Senate.

Some in the renewables business are hopeful that such a mixed scenario – paired with an unpredictable President Donald Trump – could open the door to political compromise in areas like infrastructure.

"As Democrats pick up more political power, we’re going to be putting our money on wind."

Speaking Tuesday at the American Wind Energy Association’s annual offshore wind conference, Markey said it’s important that a growing number of East Coast states now have ambitious offshore wind targets and programmes for procuring the power. “But we still need federal support as well.”

“As we move forward and the politics shift, and as Democrats pick up more political power, we’re going to be putting our money on wind,” Markey says.

“We’re going to be saying, if you want another tax bill, where are the tax breaks for offshore wind? You want to help these other industries over here, well what are you doing for our industry?”

“As the [political] pendulum swings back, that’s where we’re going to be at the negotiating table.”

The production tax credit (PTC) – preferred by the onshore wind sector – offers value to a project based on the amount of electricity it generates over ten years.

While the offshore sector is also eligible for the PTC, most offshore developers instead prefer the other option: the ITC, which covers 30% of a project’s total cost – a huge benefit given the high upfront outlay of an offshore wind farm.

Like the PTC, the ITC is phasing down – in its case along a 30%-24%-18%-12% path for projects that qualify in 2016-19, before expiring altogether in 2020. Once qualified, projects have several years to get built.

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Developers of the earliest US offshore projects have raced to lock in a portion of the ITC, including Vineyard Wind with its 800MW project off Massachusetts, and states like New York have accelerated their procurement programmes to allow for more ITC qualifications.

Extending the ITC for an extra six years would be of enormous benefit for the offshore market, allowing a second wave of even bigger projects to qualify, and making offshore wind cheaper for the states looking to buy it.

It’s impossible at this stage to tell what sort of political legs the Offshore WIND Act might have under a future Congress or president. Notably, the legislation was co-sponsored by several Democratic senators seen as potentially strong contenders for their party’s presidential nomination in 2020 – namely Elizabeth Warren of Massachusetts and Cory Booker of New Jersey, both from states with big offshore wind ambitions.

For its part, the Trump administration has surprised many in the renewables industry with its apparent support for offshore wind, cutting a contrast with its sometimes-antagonistic posture towards onshore renewables. Interior Secretary Ryan Zinke, a member of Trump’s Cabinet, is scheduled to deliver a keynote speech Wednesday at AWEA Offshore in Washington.

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