Deepwater Says Offshore Wind Farm Will Meet Tax Credit Threshold

Dec 19, 2013 2:36 pm ET

Dec. 19 (Bloomberg) -- Deepwater Wind LLC, the renewable- energy developer planning wind projects off the U.S. Atlantic Coast, expects its Block Island Wind Farm to qualify for a federal tax credit that expires this year.

The company has spent more than a 5 percent threshold on the 30-megawatt project off the coast of Rhode Island, Chief Executive Officer Jeff Grybowski said yesterday in an interview. That will let the $300 million wind farm qualify for the federal investment tax credit.

“We believe we’ve qualified for the tax credit,” he said. “We will not only meet that 5 percent threshold, we’re confident we’ll exceed it by a good margin.” The project is on track to begin offshore construction in 2015, Grybowski said.

Renewable-energy projects must begin construction, or spend at least 5 percent of the anticipated budget, before Jan. 1 to earn the credit, which reimburses developers as much as 30 percent of costs.

The company, based in Providence, Rhode Island, expects the Block Island project to be the first of several it’s planning in deeper waters where there’s stronger wind, Grybowski said.

“It’s important to demonstrate that we can permit and build a project in the U.S.” before seeking “multibillion- dollar financings for much larger projects,” he said.

Deepwater won a July auction to develop offshore wind farms in two blocks of U.S. federal waters off Massachusetts and Rhode Island.

Deepwater is planning a 1 gigawatt wind farm about 15 miles (24 kilometers) south of Martha’s Vineyard, Massachusetts, that may cost as much as $5 billion, with construction starting in 2017. The company has received backing from the hedge fund D.E. Shaw & Co.

--With assistance from Justin Doom in New York. Editors: Will Wade, Tina Davis