Offshore wind projects have taken root in America. The country’s first operating offshore wind farm, in Block Island, Rhode Island, began contributing energy to the power grid in December 2016. Now, more than 23 offshore wind projects — collectively expected to produce 16,000 MW of power — reportedly are being planned. Thus, opportunities abound for developers, contractors, and investors in the U.S. offshore wind market.
Several speakers at the recent American Wind Energy Association (AWEA) annual conference in New Orleans lauded the positive impact of Congress's extensions of the production tax credit (PTC) and investment tax credit (ITC) in December 2015. As they noted, these extensions position wind energy for a period of unprecedented stability and growth—at least for the onshore wind sector.
Offshore wind has tremendous potential in the United States, but unlike the onshore wind sector, offshore still has a long way to go to reach critical mass. The recent PTC/ITC extensions ramp down by the early 2020s. As a result, only a few early offshore projects are likely to be far enough along to benefit from the PTC/ITC extensions. Absent a further tax incentive specifically directed to offshore wind, as recently proposed by Senators Markey (D-Mass) and Whitehouse (D-RI), offshore wind will continue to rely on state-level policies to build out the necessary supply chain.
Where will U.S. offshore wind find support to attain critical mass? Here are six major areas of recent progress:
New Jersey is poised to become a national leader in renewable energy by virtue of pending legislation that would substantially decrease the Garden State’s greenhouse-gas emissions through an ambitious Renewable Energy Portfolio Standard (RPS). An RPS is a regulatory mandate that requires utility companies to obtain a certain percentage of the energy they sell from renewable sources such as wind and solar, or purchase renewable energy credits (RECs) from qualifying energy sources. Recently passed by the State Senate, a new bill would require utilities to source 80 percent of their electricity from renewable energy by 2050. If the General Assembly passes the bill and it survives the pen of Governor Christie, utilities must procure 11 percent of their electricity from renewables by 2017, with an increase every five years of approximately 10 percent until the 80 percent threshold is reached in 2050.
Co-author Morgan M. Gerard
Until very recently, mainstream power purchasers have not viewed renewable energy as a reliable hedge against other energy sources, mostly because the costs associated with constructing or purchasing the output of renewable energy systems were very high. However, renewable energy generation systems are increasingly being viewed by large and small consumers alike as a viable hedge against fossil fuel price volatility.
Last week’s U.S. Offshore Wind Leadership Conference in Boston had the vibe of a technology sector ready to break out. Industry leaders, federal officials, and a panel of Massachusetts legislators extolled the economic opportunities, and U.S. Senator Edward Markey and Massachusetts Energy and Environmental Affairs Secretary Matthew Beaton delivered inspiring keynotes. Speakers were interspersed with high-energy videos of offshore wind installations in European waters, along with many side meetings among project developers and hopeful supply chain participants.
Offshore wind is garnering more than just hype in 2016. Key developments have this once fledgling energy source poised to finally gain momentum in the United States.
Co-author Morgan M. Gerard
Opposition to the Clean Power Plan (CPP), promulgated by the EPA and championed by the Obama administration as a path to a cleaner energy future, recently came to a head as the Supreme Court granted opponents a stay halting implementation of the plan. The future of the CPP is full of uncertainty; motivated states on both sides of the debate, the recent passing of Justice Antonin Scalia, one of the votes against implementation, and the tumult created by the presidential election cycle make prognostication a difficult task. However, despite the uncertainty surrounding the CPP, renewable energy remains poised for a banner year in 2016.
Despite the currently low prices of oil and natural gas, renewable electric power generation is poised for rapid growth. Based on a “business-as-usual” scenario, Bloomberg New Energy Finance’s New Energy Outlook, June 2015 predicted a $6.9 trillion investment in new renewable electric power generation over the next 25 years. A newly published report by Ceres, Bloomberg New Energy Finance, and Ken Locklin, Managing Director for Impax Asset Management LLC, predicts a much greater opportunity for private sector companies and commercial financiers to invest in new renewable energy.
Topics: Carbon Emissions, Biomass, Solar Energy, Renewable Energy, COP21, ITC, Energy Investment, Investment Tax Credit, renewable energy investment, PTC, carbon tax, Wind Energy, Climate change, Ceres, United Nations, UNFCCC, production tax credit, cap-and-trade, renewable portfolio standard, feed-in-tariff, COP22, carbon pricing
Co-author Morgan M. Gerard
Despite the low price of oil throughout the year, 2015 may have been an inflection point for renewable energy as a competitive generation source in the U.S. Deutsche Bank has noted that renewable sources, like solar, have reached, or will soon reach, grid parity with fossil fuel sources in many states. As non-fossil energy has become more economically viable, the industry has responded by standardizing and streamlining project processes, and by accessing financing vehicles like yieldcos and public bonds. Despite growth, the past year has also been a tumultuous one full of unexpected developments and policy shifts including the COP 21 agreement and the Clean Power Plan (CPP), and the formation of intriguing grassroots coalitions, like the green tea party. All of these developments were, of course, set against the specter of a potential step-down of the Investment Tax Credit (ITC), and its surprising last-minute revival. The following is a breakdown of some of the major developments impacting renewables in 2015.
Topics: NY REV, Energy Policy, Energy Finance, Distributed Energy, YieldCo, Solar Energy, Renewable Energy, Wind, COP21, Renewable Energy 2015, Distributed Energy Resources, CPP, Green Tea Party, Net Metering, Net Energy Metering, NEM, DG, Energy Project Finance, Renewable 2015, Green Energy, Green Energy 2015, Solar Energy 2015, DER, Offshore Wind, Clean Power, clean power plan, Georgia Solar, 2015, energy, Wind Energy, Energy Project, Green 2015, California DRP