Budget bill offers US offshore wind some footing amid 'looming shadow of uncertainty'
Aegir Insights sees three more arrays in line to access tax credits and move forward, likely defining the extent of the once burgeoning industry
“Before the BBB, everything was just on hold,” said Signe Sorensen, Aegir’s lead analyst for the Americas.
But “the fact that we at least know now what we're dealing with and what the rules approximately will be gives offshore wind projects and developers a chance to see if they can achieve something under this regime,” she said.
Against a backdrop of “a large looming shadow of uncertainty,” Sorensen added, “the BBB actually does provide a little bit of certainty.”
Trump’s antipathy for renewable energy and offshore wind especially has become the stuff of legend, and gutting IRA incentives was a key goal of his administration.
While the BBB does restrict access and sunset tax credits years before they were intended, it also provides a one-year window for projects to begin construction or spend 5% of Capex – which offers several arrays an opportunity to move ahead.
Especially critical for offshore wind is the ITC, which can lower costs 30% assuming criteria are met, with additional 10% each for domestic content and energy community adders.
Projects moving forward
Projects that Sorensen sees as having a good opportunity to move forward include Ocean Winds’ SouthCoast and Iberdrola-controlled Avangrid’s New England Wind, both in the Massachusetts wind energy area (WEA).
Renexia’s US Wind off Maryland likewise is in good position, she said.
All three have federally approved construction and operations plans (COPs) in place “and some view of revenue,” she added.
US Wind has an offtake contract with Maryland for 1.5GW of its total 2GW approved capacity.
New England Wind and SouthCoast both have tentative deals with Massachusetts and Rhode Island utilities for offtake, but negotiations have stalled amid Trump uncertainty.
New England Wind was awarded 791MW to Massachusetts and SouthCoast 1GW to Massachusetts and 200MW to Rhode Island last September, but so far three deadlines for finalising contracts have passed, with the latest set for 31 December.
“Developers, obviously, would be pricing in all of the uncertainty, and the uncertainty has been so immense that the prices they would come up with would have been completely out of what the utilities would want to pay,” she observed.
The certainty provided by the BBB now offers a chance for contracts to be signed.
Looming clouds
Five US offshore wind projects are currently in or nearing construction and already have access to ITC.
Other arrays that have approved COPs but no ready access to offtake are unlikely to move forward, while Trump’s Inauguration Day anti-wind memorandum put permitting on ice, derailing newer arrays.
While the BBB offers some level of certainty, the industry faces significant and ongoing challenges from the Trump administration.
Tariffs are another murky area. Despite former President Joe Biden’s efforts and an announced $24bn in investments, a US supply chain has failed to materialise and the industry will rely entirely on imports, exposing it to Trump’s global trade war.
While politics have always been a blood sport in the US, “never has the political environment been this volatile before,” said Sorensen.
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