By: Bo Jardine, Chief Innovation Officer, Bleutec Industries

The US Inflation Reduction Act (IRA) of 2022 is set to usher a new era of US Offshore Wind Developer supported investments into the domestic US offshore wind supply chain, primarily driven by the extensive tax subsidy incentives now available to those Developers who elect to utilize domestic US suppliers and contractors.
Perhaps most pronounced is the potential 56% tax subsidy that Developers may be able to capture on their contracting of high capital cost marine installation assets (including Wind Turbine, Pile and Cable Installation Vessels) provided they utilize US domestic owned and operated companies.
In light of these game changing tax incentives, coupled with the arrive in market of capable new US Jones Act compliant offshore wind installation solutions from the likes of Bleutec Industries and Great Lakes Dredge & Dock (GLDD), how much longer can US Offshore Wind Developers can continue to justify their use of foreign contractors to deliver their projects?

For reference, here is excerpt from IRA:
Offshore Wind Tax Credit Provisions Tax Credit for Project Developers. The primary federal tax provision supporting offshore wind is the energy investment tax credit (ITC) under Internal Revenue Code (Code) Section 48, as amended by Section 13102 of the Inflation Reduction Act of 2022 (IRA). The ITC provides a 6% tax credit for offshore wind projects that begin construction before January 1, 2026, with the tax credit rate increased to 30% for facilities that pay prevailing wages and meet registered apprenticeship requirements. Projects meeting certain domestic content requirements could be eligible for a bonus credit, equal to 10 percentage points for projects meeting wage and workforce requirements (or 2 percentage points otherwise).
Section 13801 of the IRA would allow certain tax-exempt entities to receive tax credit amounts as payments (“direct pay”). The ability to receive the credit as direct pay would be domestic content requirements, with those requirements becoming more stringent over time.
Tax Credit for Manufacturers. Section 13502 of the IRA would provide a new tax credit for the domestic production of wind components and related goods such as specialized offshore wind installation vessels under the new Section 45X of the Code. For offshore wind vessels, the credit would be 10% of the sales price. For other offshore wind components, the credit would be a function of the type of component and the total rated capacity of the project, with credits available for blades, nacelles, towers, and offshore wind platforms. Taxpayers investing in establishing, reequipping, or expanding offshore wind energy manufacturing facilities also might be eligible for an allocation of an advanced energy project credit, as would be provided in Section 13501 of the IRA amending Code Section 48C.”