Governors ask Biden for more offshore wind power support

(The Center Square) — Several Democratic governors are urging the Biden administration to provide more federal funding and resources to develop offshore wind power projects.

In a letter to the Biden administration, New Jersey Gov. Phil Murphy and other governors called for steps to support the nation's wind industry by expanding access to federal tax credits, providing more money to states and streamlining the permitting process. The governors warned that several projects along the Atlantic coastline are at risk of failure.

"Inflationary pressures, Russia’s invasion of Ukraine, and the lingering supply chain disruptions resulting from the COVID-19 pandemic have created extraordinary economic challenges that threaten to reverse these offshore wind gains," they wrote. "Absent intervention, these near-term projects are increasingly at risk of failing."

The governors called on Biden to direct the Treasury Department and Internal Revenue Service to provide more details on how offshore wind companies can qualify for federal clean energy tax credits.

They also requested a revenue-sharing arrangement to divert money from federal offshore leases to states, instead of being returned to the Treasury.

Meanwhile, the chief executives called on the federal government to streamline permitting for offshore wind projects.

Besides Murphy, the letter was signed by Connecticut Gov. Ned Lamont, Rhode Island Gov. Dan McKee, New York Gov. Kathy Hochul and Maryland Gov. Wes Moore.

"Instead of continued price declines, offshore wind faces cost increases in orders of magnitude that threaten states’ ability to make purchasing decisions," they wrote. "These pressures are affecting not only procurements of new offshore wind but, critically, previously procured projects already in the pipeline."

The push for federal intervention comes at a risky time for the nation’s nascent offshore wind industry. Developers are scaling back — or, in some cases, backing out of projects — citing supply chain disruptions, higher construction costs, and a lack of state and federal government tax credits.

In New Jersey, a Danish company behind the state's first offshore wind project is delaying it until 2026, citing supply chain issues and a lack of financial support from the federal government.

Ocean Wind I, originally expected to be completed by the end of 2024, calls for the developing of 1,100 megawatts of offshore wind in waters located 15 miles off New Jersey's coast. The towering wind turbines will be capable of churning out enough electricity to power more than 500,000 homes, the company says.

In July, Murphy signed an agreement with Ørsted, allowing the company to keep federal tax credits that were supposed to be passed to New Jersey utility ratepayers to offset the potential for higher electricity rates.

New Jersey Republicans have criticized the plan, which they said would cost the state an estimated $1 billion and shift the cost of developing offshore wind to taxpayers.

Despite the turbulence in the nascent industry, President Joe Biden is pursuing plans to add at least 30 gigawatts of offshore wind in the U.S. by 2030, arguing the plan will boost the nation's clean energy industry and create good-paying construction jobs.