DAI Adds 2022 California Auction to Review of Local Content Requirements for U.S. Offshore Wind Projects

March 02, 2023

DAI has published an update to its review of economic benefit requirements for U.S. offshore wind projects. The update includes the California offshore wind lease sale auction that was held in December 2022, which led to five successful leases covering 373,268 acres off California’s northern coast.

The report, U.S. Federal and State Local Content Requirements for Offshore Wind Projects, was first published in September 2022 and analyzes both federal and state-level local content requirements, taking New Jersey as a reference case.

U.S. federal and state agencies are increasingly embedding local content requirements and incentives within the development of large-scale renewable projects. The report unpacks the key policy instruments for leveraging local content in the U.S. offshore wind sector. These include the Inflation Reduction Act, the Jones Act, federal wind lease sales, state-level power purchase auctions, and federal- and state-level grants and tax incentives to stimulate U.S. domestic workforce and supply chain development.

Behind these local content requirements lies the new enthusiasm of governments for policies that leverage domestic industrial transformation and local “green jobs” as outcomes of capital investments in renewable energy projects.

“The California auction was notable in its requirement for workforce and supply chain development that directly supports investment in California’s floating offshore wind supply chain,” said co-author Tate Crowards, an economist in DAI’s Sustainable Business Group. “This is a more targeted requirement than we’ve seen for other auctions and could play a key role in addressing gaps in the local supply chain and may help accelerate the adoption of floating offshore wind projects in the United States.”

Zachary Kaplan, Vice President of DAI’s Sustainable Business Group, said, “Since we’ve published the report, industry, investors, and the media have continued to pay close attention to the significant potential impact that the Inflation Reduction Act could have in achieving the goals of clean energy expansion and job creation in the United States. Our updated review now includes all the offshore wind lease sale auctions from 2022 and reviews the economic benefit requirements designed to unlock those crucial goals.”

In the coming months, DAI will publish a U.K.-focused version of this report.

“The United Kingdom continues to play a leading role in global offshore wind development, employing around 20,000 people, a figure that the Offshore Wind Industry Council says could rise to more than 61,000 by 2030,” added Kaplan.

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