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Struggling developers will likely be able to write off subsea cables, as a treat.
The beleaguered offshore wind industry got a small boost from the Biden administration on Friday in the form of a proposal that would expand the definition of what qualifies for a 30% clean energy investment tax credit.
Offshore wind farms have many different components beyond just the turbines, and developers have been seeking clarity on where the dividing line was between the equipment that would qualify for the tax credit, and any interdependent infrastructure like transformers and transmission lines. Under the new rules, developers would be able to include the cost of subsea cables that bring the power to shore, as well as onshore substations — not just the towers and blades or the platforms they sit on.
The proposal is part of the Treasury’s ongoing role in overseeing a range of expanded tax credits for clean energy that were in the Inflation Reduction Act. It provides similar clarity for a new tax credit for standalone, utility-scale energy storage projects, which can store power from wind and solar farms and dispatch it when needed.
“Given the new and expanded incentives created by the Inflation Reduction Act, clarity around the underlying rules for long-standing investment credits is critical as projects move from the announcement, to groundbreaking, and eventual ribbon-cutting stage,” said Wally Adeyomo, deputy secretary of the Treasury, during a call with reporters on Thursday.
John Podesta, senior advisor to Biden for clean energy innovation and implementation, who was also on the call, said that developers were hearing from their lenders that they were waiting to see the final tax credit guidance, particularly in regard to underwater cabling. Offshore wind projects have been plagued by rising costs due to inflation, supply chain disruptions, and rising interest rates. Many have asked the future buyers of their power to approve higher rates, and two projects in New Jersey were recently canceled altogether.
In July, a utility in Rhode Island decided not to move forward on a contract to buy power from a proposed offshore wind farm called Revolution II, a joint venture between Orsted and Eversource, putting the project in limbo. In a press release, the utility pointed to “uncertainty of federal tax credits” as one of the factors that likely contributed to the higher-than-expected proposed contract.
Adeyomo said the clarity provided by the tax credit rules will “allow these offshore wind companies to price their offerings going forward with the certainty to know what types of incentives they will receive from the government.”
“We appreciate the clarification from the Treasury Department that recognizes the integral nature of all components of an offshore wind project,” a spokesperson for Orsted told me.
Considering the broader economic headwinds these projects face, this expansion of the tax credit eligibility is unlikely to be enough to put the ailing industry on solid ground. Offshore wind developers are also still waiting for clarity on another Inflation Reduction Act program that could prove essential — the energy community bonus credit. The subsidy gives projects an additional 10% tax credit if they build in communities that have been host to fossil fuel plants or extractive activities. It will apply to the location of onshore substations, but developers want to see it also apply to port infrastructure.
Clean energy trade groups welcomed the proposal on Friday.
“Thanks to the IRA, clean energy businesses now have access to a stable tax platform like the one enjoyed by the fossil fuel sector for more than a century,” said Gregory Wetstone, President and CEO of the American Council on Renewable Energy in a statement. “But to fully take advantage of these benefits, they need to understand how the provisions work. The tax guidance released today provides important clarity to developers and investors looking to further America’s energy transition.”
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The lost federal grants represent about half the organization’s budget.
The Interstate Renewable Energy Council, a decades-old nonprofit that provides technical expertise to cities across the country building out renewable clean energy projects, issued a dramatic plea for private donations in order to stay afloat after it says federal funding was suddenly slashed by the Trump administration.
IREC’s executive director Chris Nichols said in an email to all of the organization’s supporters that it has “already been forced to lay off many of our high-performing staff members” after millions of federal dollars to three of its programs were eliminated in the Trump administration’s shutdown-related funding cuts last week. Nichols said the administration nixed the funding simply because the nonprofit’s corporation was registered in New York, and without regard for IREC’s work with countless cities and towns in Republican-led states. (Look no further than this map of local governments who receive the program’s zero-cost solar siting policy assistance to see just how politically diverse the recipients are.)
“Urgent: IREC Needs You Now,” begins Nichols’ email, which was also posted to the organization’s website in full. “I need to be blunt: IREC, our mission, and the clean energy progress we lead is under assault.”
In an interview this afternoon, Nichols told me the DOE funding added up to at least $8 million and was set to be doled out over multiple years. She said the organization laid off eight employees — roughly a third of the organization’s small staff of fewer than two-dozen people — because the money lost for this year represented about half of IREC’s budget. She said this came after the organization also lost more than $4 million in competitive grant funding for apprenticeship training from the Labor Department because the work “didn’t align with the administration’s priorities.”
Nichols said the renewable energy sector was losing the crucial “glue” that holds a lot of the energy transition together in the funding cuts. “I’m worried about the next generation,” she told me. “Electricity is going to be the new housing [shortage].”
IREC has been a leading resource for the entire solar and transmission industry since 1982, providing training assistance and independent analysis of the sector’s performance, and develops stuff like model interconnection standards and best practices for permitting energy storage deployment best practices. The organization boasts having worked on developing renewable energy and training local workforces in more than 35 states. In 2021, it absorbed another nonprofit, The Solar Foundation, which has put together the widely used annual Solar Jobs Census since 2010.
In other words, this isn’t something new facing a potentially fatal funding crisis — this is the sort of bedrock institutional know-how that will take a long time to rebuild should it disappear.
To be sure, IREC’s work has received some private financing — as demonstrated by its solar-centric sponsorships page — but it has also relied on funding from Energy Department grants, some of which were identified by congressional Democrats as included in DOE’s slash spree last week. In addition, IREC has previously received funding from the Labor Department and National Labs, the status of which is now unclear.
It would have delivered a gargantuan 6.2 gigawatts of power.
The Bureau of Land Management says the largest solar project in Nevada has been canceled amidst the Trump administration’s federal permitting freeze.
Esmeralda 7 was supposed to produce a gargantuan 6.2 gigawatts of power – equal to nearly all the power supplied to southern Nevada by the state’s primary public utility. It would do so with a sprawling web of solar panels and batteries across the western Nevada desert. Backed by NextEra Energy, Invenergy, ConnectGen and other renewables developers, the project was moving forward at a relatively smooth pace under the Biden administration, albeit with significant concerns raised by environmentalists about its impacts on wildlife and fauna. And Esmeralda 7 even received a rare procedural win in the early days of the Trump administration when the Bureau of Land Management released the draft environmental impact statement for the project.
When Esmeralda 7’s environmental review was released, BLM said the record of decision would arrive in July. But that never happened. Instead, Donald Trump issued an executive order directing the Departments of the Treasury and the Interior to review their treatment of wind and solar, part of a deal with conservative hardliners in Congress to pass his tax megabill — the same bill that also effectively repealed the Inflation Reduction Act’s renewable electricity tax credits. This led to a series of subsequent orders by Interior Secretary Doug Burgum that effectively froze all federal permitting decisions for solar energy.
Flash forward to today, when BLM quietly updated its website for Esmeralda 7 permitting to explicitly say the project’s status is “cancelled.” Normally when the agency says this, it means developers pulled the plug.
I’ve reached out to some of the companies behind Esmeralda 7. A NextEra spokesperson provided me a statement from the company after this story’s publication saying it is “in the early stage of development” with its portion of the Esmeralda 7 mega-project, and the company is “committed to pursuing our project’s comprehensive environmental analysis by working closely with the Bureau of Land Management.”
This article was updated after publication to include a statement from NextEra.
A judge has lifted the administration’s stop-work order against Revolution Wind.
A federal court has lifted the Trump administration’s order to halt construction on the Revolution Wind farm off the coast of New England. The decision marks the renewables industry’s first major legal victory against a federal war on offshore wind.
The Interior Department ordered Orsted — the Danish company developing Revolution Wind — to halt construction of Revolution Wind on August 22, asserting in a one-page letter that it was “seeking to address concerns related to the protection of national security interests of the United States and prevention of interference with reasonable uses of the exclusive economic zone, the high seas, and the territorial seas.”
In a two-page ruling issued Monday, U.S. District Judge Royce Lamberth found that Orsted would presumably win its legal challenge against the stop work order, and that the company is “likely to suffer irreparable harm in the absence of an injunction,” which led him to lift the dictate from the Trump administration.
Orsted previously claimed in legal filings that delays from the stop work order could put the entire project in jeopardy by pushing its timeline beyond the terms of existing power purchase agreements, and that the company installing cable for the project only had a few months left to work on Revolution Wind before it had to move onto other client obligations through mid-2028. The company has also argued that the Trump administration is deliberately mischaracterizing discussions between the federal government and the company that took place before the project was fully approved.
It’s still unclear at this moment whether the Trump administration will appeal the decision. We’re still waiting on the outcome of a separate legal challenge brought by Democrat-controlled states against Trump’s anti-wind Day One executive order.