Tax-Credit Extension Won’t Be Much Help to NJ Offshore Wind Farms
When it voted late Tuesday to enact a plan that will raise income taxes for the wealthiest Americans, Congress also voted to extend a crucial investment tax credit intended to encourage development of wind farms.
Extension of the tax production credit is not likely to help proposals to build wind farms off the New Jersey coast, however, since the incentive is due to expire at the end of 2013, long before any projects are likely to begin construction here.
“In theory, it might help the smaller projects,’’ said Erich Stephens, a vice president of Offshore MW, one of threeoff the New Jersey coast.
“As far as the larger projects go, there’s no way they will start by the end of the year,’’ Stephens said. His company has proposed generating up to 1,000 megawatts of wind capacity 16 miles offshore.
The federal tax credits could help spur,Stephens said, but far more important are New Jersey’s efforts to develop a financing mechanism to pay for the electricity the offshore wind turbines would produce.
“From our perspective, we’re looking first at what New Jersey does,’’ Stephens said. “Without the New Jersey program, it really does not matter (about the federal tax incentives).’’
The failure of the Christie administration to develop a financing mechanism to spur creation of an offshore wind industry has come under fire from Senate President Stephen Sweeney (D-Gloucester), who sponsored a bill to promote offshore wind development.
The law calls for offshore renewable energy credits, which would pay for electricity the offshore wind farms produce with subsidies included in ratepayers’ utility bills. The state Board of Public Utilities has yet to come up with a workable system for those subsidies, and that is one of the primary reasons for delays in development of offshore wind farms.
Thedrew renewed criticism from Jeff Tittel, director of the New Jersey Sierra Club.
“It has been almost two years since the Offshore Wind Economic Development Act regulations were supposed to have been put in place and we have no progress and no windmills off our coast,’’ Tittel said. “Instead the BPU is delaying the rules that would make this renewable source a reality.’’
Others were more upbeat.
Jim Lanard, president of the Offshore Wind Development Coalition, based in Washington, D.C., said New Jersey is poised to be a leader in the offshore wind industry.
“The availability of the investment tax credit for offshore wind farms provides the certainty developers need to finance and begin construction of their projects,’’ he said.
“The NJ BPU is currently working out final details of its OREC regulations and the federal government expects to begin the auction process for leasing land on the outer continental shelf off of New Jersey’s coast in the near future,’’ Lanard said. “These steps, when taken, will position the state to get out ahead of many other states that are considering offshore wind job creation opportunities.’’
Stephens conceded that the extension of the investment tax credit “is a victory of sorts,’’ since it establishes a precedent to renew the credit in future years. Lanard said longer-term extensions of the tax credit are likely to be part of future congressional discussions.
The extension of the tax credit is expected to save up to 37,000 jobs, according to the American Wind Energy Association, a trade group based in Washington, D.C. The tax credit gives wind farms 2.2 cents per kilowatt hour for energy produced from wind turbines.