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US boosts tax credits for offshore wind projects

RICHARD HEAP

March 25, 2024

Offshore wind developers in the US will be able to claim more tax credits for supporting investments in so-called ‘energy communities’ under rules released on Friday (22nd March).

The US Treasury Department and Internal Revenue Service published guidance that provides additional information on how developers can claim the tax credit bonuses under the Inflation Reduction Act. The rules enable developers to claim 10% more production tax credits, or up to ten percentage points more on investment tax credits, if they support investments in ‘energy communities’.

Energy communities are areas which have economies that historically relied on the energy sector, such as regions around former coal mines or coal power stations; regions reliant on the sector for jobs or local tax revenues; and brownfield sites contaminated by hazardous materials or other pollutants.

The guidance clarified that offshore wind projects could now claim a tax credit for their full nameplate capacity if their supervisory control and data acquisition system (SCADA) infrastructure are located in low-income areas. It said this reflected the fact that SCADA systems at ports are crucial for offshore wind projects.

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