Sen. Blumenthal Lauds Expansion of Tax Credit for Offshore Wind Projects

NEW LONDON, Conn. — Sen. Richard Blumenthal, D-Conn., visited State Pier in New London, Connecticut, on Monday to tout and celebrate the Biden administration’s decision to expand eligibility of federal tax credits for offshore wind projects.

“This tax credit has been a long time in coming,” Blumenthal said from the site of a planned offshore wind staging and assembly facility.

“We pushed for it as a delegation. It’s in federal law, and the regulation enables it to go forward,” the senator continued. “We need to make sure that ports like New London are fully eligible for it.”

The “it” Blumenthal was referring to are new rules the Biden administration announced March 22 that will make it easier for offshore wind developers to claim a subsidy for facilities planned in areas that have historically relied on fossil fuel industries for employment.

The energy communities tax credit is worth 10% of a project’s cost and can be claimed on top of the Inflation Reduction Act’s base 30% credit for renewable energy projects.

Under the new rules “energy communities” are defined as areas which have both significant employment or tax revenues from fossil fuel industries and high unemployment.

“This change reflects the fact that onshore … equipment at ports is critical to offshore wind projects and that offshore wind projects make significant investments and create jobs at these ports over the duration of projects, which is the goal of the energy communities bonus,” the Treasury Department said in a press release.

Blumenthal had been championing the expansion of the tax credit for months.

Last fall, he joined offshore wind advocates at a Hartford, Connecticut, press conference urging the Treasury Department to issue guidelines on what elements of an offshore wind project would be eligible for tax credits.

“The holdup seems to be bureaucratic rigamarole and red tape,” Blumenthal said at the time. 

“IRS regulations are not always simple and straightforward but this one ought to be,” he added.

The press conference came in the wake of a dire announcement by Avangrid, developer of what would have been the state’s largest offshore wind farm, that it was essentially tearing up its contract to supply power to the state because increasing costs made the project infeasible.

“In no way is [Avangrid’s] withdrawing from their agreement a challenge to the basic need for offshore wind development. It’s part of our future despite the obstacles we are seeing right now,” Blumenthal said at the time.

“These are short-term obstacles,” he added.

Connecticut Gov. Ned Lamont that same week announced a new multi-state agreement with Massachusetts and Rhode Island to work together to solicit new offshore wind project proposals.

At present, the state has just one contract for offshore wind power, a 300 MW hookup with Ørsted and Eversource’s 704 MW Revolution Wind project. 

Federal regulators gave the project the go-ahead last November, and the project partners are investing $77.5 million to make State Pier the staging area for the offshore work.

The bidding period for other offshore wind power projects in Connecticut closes on Wednesday.

“Bids are due in a historic RFP that Connecticut is undertaking together with our sister states in Rhode Island and Massachusetts,” said Katie Dykes, Connecticut’s environmental protection commissioner, during the State Pier event. 

Dykes predicted the new clarity regarding the rules will help drive new investments and secure lower-cost wind power in a state that has a goal of a zero-carbon grid by 2040.

“We’re out shopping for up to 6800 MWs across the three states of offshore wind,” she said.

Joining in the celebration of the clarified and expanded incentives was Rep. Joe Courtney, D-Conn., who wrote a letter to the Treasury Department last fall urging the department to expand the eligibility for an Inflation Reduction Act tax incentive.

He was joined in signing the letter by Democratic Reps. Seth Magaziner, of Rhode Island, Bill Pascrell, of New Jersey, Jim Himes, of Connecticut, and 48 other House members.

“This is game-changing news,” Courtney said.

“Expanding eligibility for the Energy Communities Bonus Credit rewards offshore wind companies who have chosen to locate their projects in Energy Communities and will incentivize future offshore wind projects to select locations like the State Pier in New London to conduct business.

“[This] announcement, coupled with the offshore wind projects already taking place in the Long Island Sound, will further cement our region’s leading role in clean energy production which is good for the economy, homeowners, and our climate,” he said.

Liz Burdock, founder and CEO of Oceantic Network, a group formally known as the Business Network for Offshore Wind, said the expansion of eligibility for the 10% Energy Communities credit “creates an easier path to market for many offshore wind projects. 

”Crucially, it channels a greater portion of project funding into the development of ports, laying a robust foundation for supply chain advancement,” Burdock continued.

“By taking a more holistic approach to the Energy Communities Bonus, consistent with the intent of the legislation, the Biden-Harris administration has ensured that local ratepayers will see cost reductions and long-term, high wage jobs will be created in the areas that need it most.” 

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