The high cost of offshore wind is still a barrier to deployment in the United States, despite the fact that Congress recently extended the federal Production Tax Credit (PTC) another five years. To signal to foreign financiers that states are committed to offshore wind development, states must not rely solely on the federal PTC. State leaders could enact a state-level wind credit to offer additional financial support. The cost of the wind credit can be offset by income from leasing state lands for renewable energy development, as New Mexico has successfully done with its economy-boosting Renewable Energy Production Tax Credit.
In 2002, New Mexico instituted a state Renewable Energy Production Tax Credit (REPTC) to stoke clean energy investment. The program was so successful that the annual production tax credits for solar are maxed out until 2022. The tax liability is capped at a maximum of $33.5 million per year for 10 years, a fraction of the money the state will earn by leasing land for renewable energy uses. Those land leases are expected to bring in $574 million to the state, far exceeding the cost of the tax credits. Neighboring states, including Arizona, followed New Mexico’s lead and instituted similar policies.
States could follow New Mexico’s example and lease a portion of state lands to pay for a state wind credit. Leasing state lands and rooftops could be a significant source of revenue that could be used to pay for a wind tax credit. Offering a state wind credit would send a clear signal to investors that states are serious about offshore wind development and attracting middle-class jobs. The wind credit can be modeled after similar credits in New Mexico or the federal PTC.