US clarifies labour requirements for IRA projects
US clarifies labour requirements for IRA projects | Windpower Monthly
Guidance on wage and apprenticeship requirements for projects using clean energy tax credits has been released by the US treasury department.
Under the Inflation Reduction Act (IRA), wind projects can receive up to five times the baseline value of tax credits if they meet prevailing wage and apprenticeship requirements.
The treasury said it would offer leeway if projects underpay, allowing them to catch up. Penalties will be waived for companies paying less than a prevailing wage as long as they correct the error within 30 days, or before they apply for a tax credit.
There is a “good faith” waiver if companies cannot hire apprentices in their local area.
American Clean Power Association CEO Jason Grumet welcomed the detailed guidance: “The newly proposed rules will go a long way to providing more certainty for clean energy developers on how to satisfy the labour requirements and, in turn, help to recruit, train, and deploy highly skilled, well-paid American workers for this critical mission.”
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.