The world’s offshore wind industry has been hit by what some have called a “perfect storm” of economic challenges. It’s a vulnerable moment as the U.S. continues to build the offshore wind power we need — enough to provide clean, domestic power to millions of homes and good jobs to hundreds of thousands of workers. . Given what we stand to gain, I am confident that America’s leaders will not shy away from the heavy lifting necessary to grow a new industry that can provide so much for our communities.
Consider how these economic challenges occurred. US ocean air began to tighten in the years leading up to and during the COVID-19 pandemic. After bidding and contracting for long-term prices based on a pre-COVID financial outlook, the ground has shifted under the global economy and the offshore wind industry. Economic challenges typical of the cyclical nature of the energy industry are combined with pandemic-driven inflation, high interest rates and strains in the global offshore wind supply chain. Projects are now moving forward amid these economic difficulties – and some are currently unable to overcome them.
It is clear that we need to build a stronger foundation for American offshore wind power, one that builds a sustainable, cost-competitive industry. Central to that foundation is seeing US projects built — not canceled or delayed. Offshore wind projects are driving supply chain and infrastructure investments that are driving down prices. They are what bring the benefits of ocean wind renewal to our communities, and how we create our clean energy future.
Even in the midst of today’s financial challenges, the fact remains: The US has a world-class offshore wind resource that is essential to achieving our nation’s clean energy goals. Many state goals also rely on offshore wind – so we’re seeing state leaders reaffirm their commitment to this critical energy resource.
Last October, New York selected projects to provide more than four gigawatts of offshore wind electricity, and New Jersey will soon announce its third set of project awards. Meanwhile, Massachusetts, Rhode Island, and Connecticut announced a first-ever multi-state purchasing plan to reduce costs, and California enacted legislation for a central purchasing mechanism to help achieve ot the ambitious floating offshore wind goals. And for the very first projects captured in the “perfect storm” of pre-COVID contract prices, New York, Massachusetts, and Connecticut offered a variety of rebidding opportunities. Rebidding projects quickly, efficiently, and in consideration of ongoing permitting and contracting processes is critical to offshore wind development. These are the types of critical and creative solutions needed to ensure stronger projects in the future.
The federal government also has the tools, and an important part to play, to ensure that the US offshore wind project pipeline and related infrastructure and supply chain investments continue to move forward. The Biden administration’s landmark clean energy policy – the Inflation Reduction Act – has already delivered more than $310 billion in clean energy investments, created more than 211,000 jobs, and helped revitalize communities across the country. Broader access to IRA tax credits for US offshore wind development will help address the effects of inflation facing the industry, further revitalize manufacturing and port communities, and release to more transformative benefits for workers, communities, and the environment. Continuing to provide guidance, such as November’s Section 48 clarification, for strong offshore wind investments to qualify for IRA benefits will help fully launch this critically needed clean industry. energy so that it can thrive – and communities can benefit – for decades to come.
With continued, timely action from our state and federal leaders, America can emerge from this moment with an offshore wind industry strong enough to meet our ambitious and achievable goals. economic, environmental, and energy security goals, and in a way that maximizes benefits for the communities that need them most.
There are many reasons to be optimistic about America’s coastal air, despite these turbulent times. Projects currently under construction will soon provide the first gigawatt of US offshore wind power, the largest project so far just approved off the coast of Virginia – with prices lower than originally announced – and the industry has already created thousands of well-paying jobs. These benefits will spread further as the projects continue to develop on all coasts. By using all the policy levers available to meet today’s economic challenges, we will keep the US on the path to producing offshore wind at the scale we need, unlocking the benefits of change for for generations.
Stephanie McClellan is the executive director of Back to the frontis a non-profit that seeks to advance American offshore wind power.
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