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By Jon Hurdle
AOL Energy
It's not the whole answer but it's an important step in the right direction.
That's the take of America's nascent offshore wind industry on the U.S. Senate Finance Committee's recent approval of a plan to extend an investment tax credit on offshore wind installations by one year until the end of 2013.
Crucially, the panel's vote allows projects to be eligible for the credit if they "commence construction" within the qualifying period. That's a change from the previous language which required installations to be "placed in service" during that time – a restriction that effectively rules out offshore wind projects because of their five- to seven-year lead time from inception to implementation.
The measure would allow qualifying projects to take the investment tax credit in lieu of a production tax credit which currently applies to producers of offshore wind power and other sources of renewable energy. The PTC was also extended by a year to 2013.
By itself, the one-year extension of the ITC – which was due to expire at the end of 2012 – isn't going to kick-start the U.S. offshore wind industry, which has yet to build a single utility-scale wind farm, in contrast to Europe where offshore wind has been contributing to national grids for some 20 years.
But U.S. offshore wind advocates hailed the vote as an important first step to overcoming investors' reluctance to support projects such as NRG's Bluewater Wind, a proposed wind farm off the coast of Delaware, which was put on hold late last year because the company was unable to find investment partners.
The Aug. 2 vote is a "critical step towards the establishment of a sustainable and robust offshore wind industry," said Jim Lanard, President of the Offshore Wind Development Coalition. "Congressional support for the investment tax credit for offshore wind sends the appropriate signal to investors who need the certainty that the Senate Committee's action would provide."
For the measure to spur actual construction of wind farms, it will need to be extended again, a development that looks more likely given the strong bipartisan backing for the bill, Lanard said.
"I'm cautiously optimistic that will happen," he told AOL Energy. He predicted that cross-party support for the measure as it progresses through Congress will be boosted by the job-creating potential of the offshore wind industry.
Next page: More on the tax credit vote
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