Mar. 25—NEW LONDON — State officials say the expanded eligibility of federal tax credits for offshore wind projects announced on Friday by the Biden Administration comes at an opportune time.
The bidding period for new offshore wind power projects in Connecticut closes on Wednesday, and offshore wind developers have spent the last year struggling with cost increases associated with inflation, high interest rates and supply chain issues. Some companies have canceled, postponed or tried to rebid projects in the U.S. and abroad.
On Friday, the Treasury Department issued new guidance on the offshore wind tax credits that state Department of Energy and Environmental Protection Commissioner Katie Dykes said provides clarity and incentives that 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.
Dykes on Monday was among a host of state and local officials to join U.S. Sen. Richard Blumenthal, D-Conn., at State Pier, the site of an offshore wind staging and assembly facility. The group celebrated the news that in addition to the 30% tax credit already available for renewable energy developments, another 10% bonus credit is available for projects in locations deemed as "energy communities." Energy communities are areas that have experienced job losses, economic distress or serious health ramifications because of proximity to polluted industrial sites known as brownfields or coal- or gas-fired power plants.
The tax credit program is part of the 2022 federal "Inflation Reduction Act," and Blumenthal said he expects that places like New London, New Haven and other areas of the state being eyed for development by the offshore wind industry would be deemed energy communities and benefit as a result.
"(Offshore wind) is our future, we need to make sure we realize its full potential," Blumenthal said.
With the list of energy communities not yet established, it remains unclear if New London qualifies and why.
Connecticut has just one contract for offshore wind power, the 300 megawatts associated with Ørsted and Eversource's 704-megawatt Revolution Wind. That project is under construction and will be staged at State Pier this spring.
Paul Lavoie, chief manufacturing officer for Connecticut and chairman of the board for the Connecticut Wind Collaborative, said federal tax credits provide needed incentives for the offshore wind companies to invest in Connecticut. Aside from State Pier, which Lavoie called the "epicenter of the offshore wind industry," the tax credits open more opportunities for the state's other deep water ports in Bridgeport and New Haven.