The White House is tossing a lifeline to clean energy projects — extending a key tax credit to help defray the rising costs of building offshore wind turbines and battery storage. The high costs of steel and interest rates are hurting the prospects of a major potential source of carbon-free electricity: wind farms off the Atlantic coast. Earlier this month, Danish developer Ørsted canceled a massive offshore wind project off the coast of New Jersey. The decision to cancel Ocean Wind, which had been expected to provide power to nearly 1 million people in the Northeast, was viewed widely as a warning signal of the industry’s straits. If more dominoes fell, that could put out of reach President Joe Biden’s goals for using large-scale wind power to slash carbon pollution tied to America’s appetite for electricity. “While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of expanding U.S. offshore wind,” John Podesta, a senior White House energy adviser, told reporters. The proposed tax guidance from the Treasury Department and IRS clarifies that the undersea cables that tie into the electric grid qualify for so-called Section 48 investment tax credits under the Inflation Reduction Act, write Heather Richards and Brian Dabbs. Battery storage and smaller-scale solar projects also qualify under the credit. ‘It’s messy’ The response from the renewable energy industry came swiftly today. Companies and advocates had been pressing the White House to act more quickly. Gregory Wetstone, CEO of the American Council on Renewable Energy, applauded the administration for “fully maximizing” the climate law to boost the industry’s shot at success. Significant push and pull has sent mixed signals about the state of clean energy. Solar stocks are dipping, but rooftop solar installations are at record levels. Electric vehicle sales are up even as auto companies recoil at the billions of dollars going into building battery and EV manufacturing plants. The offshore industry is on track to open two major wind farms in the U.S., but developers canceled about a quarter of the contracts for wind power. Turbine manufacturers are awash in red ink. “It’s messy,” said Andrew Hoffman, a professor of sustainable enterprise at the University of Michigan. “I’ve always struggled with the idea that we’re going to deal with climate change, make ourselves rich and live happily ever after.”
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