Strong with the wind: NRDC proposes consumer-friendly solutions for coastal states to jump start offshore wind investment
Offshore wind should already be becoming a core part of the energy mix in coastal states, but it’s not. The U.S. Department of Energy’s (DOE) landmark study, 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply, found that the United States could obtain 20 percent of its electricity from wind by 2030, and more than 15 percent of that wind power could come from offshore projects. But the United States is obtaining precisely zero percent right now in 2013, and while there are a handful of promising projects, their future is far from assured.
Offshore wind is safe, clean and reliable. It can be sited in ways that are protective to wildlife. It also does not require onshore transmission lines and can deliver energy directly to densely populated spots like New York City. It’s becoming commonplace in Europe; Japan and China have projects deployed. So what’s not happening here?
Ahead of the Offshore Wind Power USA Conference taking place in Boston February 26th and 27th, NRDC has just released a new analysis on how U.S. states with offshore wind potential can jump start investment in the sector in a way that both rewards investors and protects consumers.
The paper can be particularly helpful to a few East Coast states that are already making significant strides toward developing a local offshore wind energy industry. This includes Maryland, where the state’s offshore wind legislation – which will incentivize the construction of offshore wind turbines 10 miles off the coast of Ocean City – gathered momentum last week when it passed the state House of Representatives. It also includes New Jersey, which has put an innovative legal framework in place and is in the middle of a process where the stakeholders are working hard to get the implementation details right. The paper also has guidance for New York, where an opportunity exists with a planned project off the coast of Long Island to combine the revenue policies outlined with the paper with low cost financing from Governor Cuomo’s recently announced Green Bank and a federal lease to deliver exceptional offshore wind value for money.
Specifically, the paper, entitled Fulfilling the Promise of U.S. Offshore Wind: Targeted State Investment Policies to Put an Abundant Renewable Resource within Reach, sketches out a simple, proven policy formula:
- Provide revenue certainty: build on the states’ successful renewable portfolio standard (RPS) programs, enhanced by key lessons learned from Germany on how to launch the offshore wind sector, and offer offshore wind companies long term, steady cash flows that reflect the value of their energy, their contribution to energy security, and the environmental benefits they provide;
- Prioritize consumer protection: ensure that consumers get their share of economic benefits of offshore wind by refunding any excess money earned by offshore wind farms to consumers; and
- Ensure sufficient financing: create partnerships between the banks that finance offshore wind farms and state financing programs or “green banks” to ensure there is enough affordable capital to build these facilities without having the public take on any undue risks.
The paper argues that federal incentives in the form of tax credits and accelerated depreciation are a vital part of launching offshore wind, and the recent extension of these benefits by Congress is welcome news. But federal support, while necessary, has so far not been sufficient. For investment to flow to the offshore wind sector, states also should implement these policies which ensure projects have certainty that they will (1) receive sufficient revenues and (2) have sufficient access to affordable debt capital at a time when the capacity of private sector banks to fund these large, but vital, projects is limited.
In short, by following the policy guidelines outlined by NRDC, coastal states can tap into a limitless clean energy resource that lies just off our shores and start a virtuous cycle that increases investment, jobs and energy security while rewarding and protecting investors and consumers alike.