As the U.S. Offshore Wind Industry Is Poised to Take Off, How Are We Going to Pay for It?

Liz Burdock, Executive Director, Business Network for Offshore Wind

The first half of 2018 has been an exciting time for the U.S. offshore wind energy industry, with a whole series of important policy and company announcements coming out, one after the other. It’s becoming clear that offshore wind energy is preparing to take its place as a significant source of clean power for the Northeast and Mid-Atlantic coasts, following the example how offshore wind has rapidly expanded in northern Europe.

But first we have to build the offshore wind farms and the individual turbines, and that is going to take billions of dollars in manufacturing, construction and assembly costs, not to mention hooking the turbines together and to the mainland with miles of expensive underwater cables.

Some of the same global companies that have supported the industry in Europe are now here in the states, and they are prepared to make some major investments, but they can’t do it alone. The other challenge we have is that the Investment Tax Credit (ITC) and the Production Tax Credit (PTC), which have been such a boon to the on-shore wind industry, expire at the end of 2019, which means that many of the offshore projects currently on the drawing board will not be able to take advantage of the credits before they expire.

To address these cost and supply chain issues, my organization, the Business Network for Offshore Wind, recently held a Finance Forum with our partners , Société Générale, to discuss ways in which to bring additional capital to the U.S. offshore wind market, and produced a report based on the forum.

The report’s most important finding was that the possible loss of the investment tax credit could be offset by a more robust, efficient domestic U.S. supply chain. In other words, The higher costs for the companies that often must transport components from Europe can be significantly reduced by making as many pieces as possible here in the U.S. That’s good for American jobs, and good for ratepayers.

And we can do that, if we lock in long-term contracts for the power produced by the wind farms, and plan to consistently phase in projects every year for the next ten to twenty years so that our manufacturing and skilled labor capabilities have a chance to take over more and more of the process of building and assembling the turbines right here in the U.S.

A well-coordinated, regional offshore wind industry will in turn lower the perceived and actual risks for investors, and allow them to provide the financing that is the glue that will hold these multi-year, complex projects together. For more on the financing of offshore wind farms, you can read the full report  here .