Articles filed under Taxes & Subsidies from Massachusetts
“Since the business case is being impacted by external delays, we are requesting an extension from the IRS for the originally planned ITCs of the project,” Torgerson told analysts. “We’re petitioning the IRS to get an extension of that ITC at the 24 percent level…through the 2022 timeframe.” The delay means Vineyard may be able to upgrade to longer rotor blades for its 9.5-megawatt MHI Vestas turbines, Torgerson said — jumping from a 164-meter rotor diameter up to 174 meters. Longer blades mean more electricity can be generated.
With the federal tax credit for offshore wind projects about to expire, every day counts.
Beyond the immediate concerns with permitting, Vineyard Wind faces a tangle of logistical challenges and potential investor turmoil if the project continues to see delays. Anthony Logan, an industry expert with the renewables research firm Wood Mackenzie Power, has spent the past six years forecasting the wind energy field. He said that while Vineyard Wind, barring major disaster, remains poised to become the first industrial-scale offshore wind-farm in the U.S., the financial success of the project is dependent on qualifying for a federal tax incentive for wind energy projects, known as the investment tax credit (ITC).
The Massachusetts Department of Public Utilities approved multibillion dollar offshore wind contracts with Vineyard Wind on Friday and, over the objections of Attorney General Maura Healey, authorized the state’s three utilities to collect an additional $168 million from ratepayers just for carrying the contracts on their books.
As Massachusetts gets ready to issue its second request for offshore wind proposals, the state is weighing whether to speed up its procurement process to allow developers to reap federal tax benefits. Energy developers and environmental groups are encouraging the state to launch the solicitation as soon as next month.
The disagreement over Vineyard Wind’s waiver concerns a technicality in New England’s power markets. The company requested an exemption that would have allowed it to bypass a minimum offer price on subsidized energy resources that participate in the grid operator’s annual markets for reserve power. FERC agreed to a fix proposed by ISO New England that would allow Vineyard Wind to qualify for the exemption in the coming years.
With no progress toward securing payments due the town of Kingston, the owners of the Independence wind turbine have been given a 30-day deadline to pay up or risk suspension of site plan approval.
A September report from Bank of America Merrill Lynch indicated that the federal Bureau of Ocean Energy Management would approve projects like Vineyard Wind in a timely manner, Beane said. The report said timing of permitting affects whether offshore wind developers can take advantage of federal investment tax credits that are expected to expire in 2024.
The Vineyard Wind project is split into two, 400-megawatt phases, with the first phase scheduled for completion by January 15, 2022, and the second phase by January 15, 2023. The price for energy and the environmental attributes (called renewable energy credits) starts at 7.4 cents a kilowatt hour in phase one and 6.5 cents a kilowatt hour in phase two. The prices escalate at 2.5 percent a year over the 20-year life of the contract, with an average blended cost of 8.9 cents a kilowatt hour.
Calter said KWI was harmed financially by the changes the town made to the requirements for operation of the turbine, and if willing to pay the back taxes and rent, the deal may be restructured. At Monday night’s Planning Board meeting, the public hearing to discuss revoking site plan approval.
“The department concedes that customers taking net metering services directly receive the benefits of the net metering system,” the DPU said in its ruling. “The costs of net metering, however, are borne by all electric customers, whether or not they receive net metering credits. Consequently, there is a transfer of costs rooted in the net metering system.”
The Massachusetts Clean Water Trust Board of Trustees voted Wednesday, August 2, to convert what was a conditional $4.86 million grant to the town into a loan. The money, originally stemming from the American Recovery and Reinvestment Act of 2009, came to Falmouth through the trust to pay for construction of the second turbine, known as Wind 2
The area along the coast of New England is considered the Saudi Arabia of offshore wind. However, the federal tax subsidy designed to jump-start production of ocean wind energy will soon be drying up.
To control costs, the state restricts the amount of solar power that can be financed in this way, and state officials informed the industry on Friday that the cap has been hit. There was essentially a run on these certificates in recent weeks, as solar panel builders rushed to get in line on behalf of their customers as the cap drew near.
The typical price of a tax equity investment for an on-shore project that carries no debt is between 7.5 and 8.5 percent. By adding debt to the project, the range increases to the mid teens. ...“Admittedly it is being built by Siemens but there are also a lot of local contractors. ...It’s complex, so that would make any first time investor in the offshore industry nervous. So that puts your price of tax equity north of the mid teens, which makes it incredibly expensive."
The US government is promising to back the controversial Cape Wind project with $150 million, federal officials said, signaling a vote of confidence that the offshore wind farm will get built.
Rodgers said the contract was the result of prolonged negotiations, and said the timing of the announcement was not related to the expiration of the federal tax credit. He declined to say if Cape Wind would be eligible for the tax credit without the cost of the contract. The tax credit, if awarded, could pay for 30 percent of construction costs.
Just days before an important deadline to qualify for crucial federal tax credits, Cape Wind has signed a deal with Siemens to build the project's turbines and an electric service platform to convert its power for transmission.
Parker hopes that Cape Wind can't find lenders to help pay the more than $2 billion it will take to build 130 wind turbines, each one rising more than 400 feet out of Nantucket Sound. Cape Wind at one point said they would have no problem borrowing money to build the wind farm if the Massachusetts Department of Public Utilities approved generous agreements with power companies.
In a statement released Tuesday, officials with PensionDanmark -- a nonprofit labor market pension fund with $24.7 billion in assets -- said they would provide a mezzanine loan for the offshore wind project planned for Nantucket Sound. In its press release, PensionDanmark states that its commitment is conditional on a final investment decision that will be made by the end of the year.