For the last decade, an important opportunity has eluded the US: the ability to create tens of thousands of new good-paying jobs, revitalise American manufacturing, and drive our clean energy transition forward with affordable, reliable offshore wind power. As nations across Europe and Asia have capitalised on the benefits of offshore wind, we’ve fallen behind here.
That’s about to change, and the Inflation Reduction Act (IRA) is a big reason why. This landmark legislation takes great strides in overcoming critical hurdles to offshore wind’s development and putting the US on par with overseas competitors. The centrepiece of the bill’s $369bn for clean energy programs — the most aggressive and consequential climate investment in US history – is long-term tax credits for development. This will serve as a match to flame as states have already primed the market by demanding 40GW of offshore wind for their portfolios – not to mention the federal government taking actions to deploy 30GW by 2030.
One of the most important provisions in the law is the $30bn in manufacturing tax credits to produce critical offshore wind components like turbines, cables, blades, and vessels. Domestic manufacturing is further buttressed by $10bn for advanced energy manufacturing, expanded Department of Energy loan authority, and tens of billions of dollars for green banks that could provide the critical financing to local manufacturers looking to scale up their businesses.
These incentives will bring much-needed confidence to the burgeoning US offshore wind market and accelerate development to top speed. In fact, a recent Boston Consulting Group analysis estimated that the IRA’s tax credits will cut the cost of generating offshore wind power by 42%.
Localising a domestic supply chain of manufacturers is critical to unleashing the US offshore wind industry and making it globally competitive. Worldwide demand for offshore wind is through the roof, threatening to divert precious investment from our shores and exacerbating already thinned supply chains. The IRA, in conjunction with the bipartisan IIJA infrastructure package and wider efforts within the Biden-Harris administration, will launch our emerging industry into a lead role on the world stage.
These incentives will bring much-needed confidence to the burgeoning US market and accelerate development
Make no mistake: the US offshore wind manufacturing industry is coming to life and will soon be exporting parts across the ocean as well as building our own projects.
In the state of South Carolina, a newly expanded factory will produce miles of export cables to feed power from wind turbines to the electrical grid. Factories in Baltimore and Paulsboro, New Jersey are among the dozen being built to manufacture the steel towers, foundations, and blades for the 2,100 wind turbines we need to reach national goals — injecting hundreds of millions into the local economies and creating hundreds of manufacturing jobs in the process. Shipyards in Texas, Louisiana, Florida, Massachusetts, and Pennsylvania are busy building dozens of new service operation vessels needed to construct wind farms safely from turbine to turbine.
These early-stage supply chain advancements have been supported by bold leadership in state capitals and encouragement from the Biden-Harris administration. The IRA represents Congress stepping up to the plate to turbocharge this growth.
The IRA’s manufacturing support is just scratching the surface of what this legislation does for offshore wind. Like other renewable energies, offshore wind needs an updated transmission system, and the IRA and IIJA together take the critical first steps to encourage long-term coordination planning and development. To build market confidence, the legislation also reverses a leasing moratorium in the South Atlantic and allocates millions of dollars to key federal agencies to help review projects for environmental safety in a timely manner.
But fully unleashing the domestic offshore wind supply chain requires more action. Small and minority US businesses need targeted support to scale up and earn needed quality certifications. Workforce training centres, community colleges, and institutions of higher education must bring on new programmes to train the tens of thousands of skilled workers — from engineers to welders — that the industry will soon demand. And while the early investments from Congress are critical to building momentum, upgrading our grid is its own herculean effort. All together these actions form a National Industrial Offshore Wind Strategy that will put the US’ national 2030 goal within reach.
After a decade of falling behind, American offshore wind is now poised to leverage our strength in manufacturing, engineering, and innovation to achieve domestic energy security andsupply chain self-sufficiency. And that’s a big deal.
· Liz Burdock is CEO of the Business Network for Offshore Wind, a non-profit dedicated to the US offshore wind sector and supply chain