Tax credit a crucial piece to puzzle 

NEW BEDFORD – The Jones Act may be one obstacle facing the American offshore wind industry, but insiders say it’s not the most important.

What’s more crucial to jump-starting the industry, they say, is renewing a federal investment tax credit for renewable energy.

“Once there is an industry, the vessel issue will solve itself,” New Bedford Wind Energy Center Director Matthew Morrissey said. “Investment tax credits and power purchase agreements are much more pressing factors.”

The federal investment tax credit is set to expire in just two days, at the end of 2013. Through that program, investors could receive a cash grant covering up to 30 percent of their investment.

Offshore wind proponents say such a credit is critical to getting the offshore wind industry off the ground because developing the wind farms can take up to eight years. They say the tax credits give investors assurance that they will see a return.

“We need developers to be able to predict the market over the long term,” Morrissey said.

To qualify for this round of tax credits, a company has to prove that construction has begun on its project before Jan. 1.

There has been much speculation as to whether CapeWind will meet this deadline, though spokesman Mark Rodgers said it will.

He would not provide details, but last week the project announced it had signed a deal with Siemens to build 101 of the project’s planned 130 wind turbines for Horseshoe Shoals.

Even if CapeWind can take advantage of the soon-to-expire tax credit, advocates say it needs to be renewed in order to encourage more development.

After the tax credit expires, Congress can retroactively restore it, something Congressman William Keating said he hopes to do.

Though currently the tax credit is something that expires annually, Keating said he is proposing that the next tax credit extension expire not on a particular date, but once there are 3,000 megawatts of offshore wind energy in the United States. (For reference, CapeWind is a 455-megawatt project.)

“The one thing we need to do in Congress is create more certainty so it is not start and stop,” he said. “People want to make long-term investments. To maximize that on the private side you need to have certainty.”

Keating said he hopes that the tax credit can be restored as part of a tax reform package.

Though the investment tax credits have been fiercely opposed by Republicans who say it gives renewable energy unfair advantages on what is supposed to be a free market, Keating said he is hopefully that Congress’ recent budget compromise is a good sign.

“Hopefully there is a greater appetite to cooperate in Congress and help move the country forward from an economic standpoint,” he said.

Deepwater Wind’s Jeffrey Grybowski said the investment tax credit will be crucial for his project’s future. Though his project for offshore Massachusetts and Rhode Island will not begin construction for roughly five years, he said he will continue to lobby for an extension.”

“Luckily, with a more long-term project we have some time,” he said.

Whether the investment tax credit is renewed is not something New Bedford Mayor Jon Mitchell is leaving to chance.

Mitchell, who has made multiple trips to Washington, D.C., to advocate for the tax credit, said he will be stepping up his lobbying efforts for the credits that he sees as crucial to a New Bedford renaissance.

“My advocacy for the investment tax credit is similar to my advocacy at the federal level for fishing,” he said. “These are major industries we want to see flourish in New Bedford in the long run.”

“We need this tax credit to establish a pipeline of offshore wind projects in the United States,” he said. “That pipeline is critical to New Bedford’s future.”

Once an industry is established, Mitchell said he hopes New Bedford’s South Terminal will convince manufacturers to locate more facilities in the city.

So far, Mitchell has mainly lobbied the Massachusetts delegation, as well as officials in the White House, he said.

“We need to continue to bang that drum,” he said. “We want to use every occasion possible to talk about the investment tax credit and what it means for bringing jobs to our city.”