Gov. O’Malley wants tax credit for turbine builders

ANNAPOLIS — Gov. Martin O’Malley will propose a tax credit for manufacturers that build components for offshore wind turbines as part of his growing slate of legislation to nurture the market for wind energy in Maryland this year.
Supporters of the governor’s tax credit plan said the state has the opportunity to woo manufacturers that will need to locate close to mid-Atlantic wind farms now in the planning stages.
“All of the demand for the product has been in European waters. If you wanted to build a wind turbine today, you would have to cross the Atlantic to get your parts,” said I. Katherine Magruder, executive director of the Maryland Clean Energy Center. “You could get some parts from American companies, but they’re not ready to go.”
The tax credit legislation would dovetail with another gubernatorial proposal that seeks to require the state’s five electric utilities to enter into long-term contracts to buy wind power generated off Maryland’s coast.
“What we don’t want to have happen is we create a wonderful market for offshore wind in Maryland and have to import the equipment from elsewhere,” O’Malley spokesman Shaun Adamec said Friday.
Adamec, said the proposal was still being crafted and that the administration had not settled on a size for the credit program, nor had it determined how much each manufacturer would be able to claim.
Abigail Hopper, the governor’s energy advisor, said the credit would be awarded to manufacturers that move into the state, or Maryland businesses that retool, based on “investment in new job creation.”
“It’s totally new companies or new revenue for companies,” she said. “It’s income that doesn’t exist in our state.”
O’Malley’s legislation pushing utilities to buy wind power would require between 400 and 600 megawatts of production capacity off the coast. The towering turbines in offshore wind farms generate 3.5 megawatts each and cost $5 million to $7 million, said Jim Lanard, president of the Offshore Wind Development Coalition, a lobbying group supported by seven wind power developers. To hit 600 megawatts, developers would need 171 turbines, with a price tag between $855 million and $1.2 billion.
Hopper said that much development would support about 2,000 construction and manufacturing jobs, and 400 maintenance and upkeep jobs after that.
“What states up and down the East Coast are looking for is as the prices come down, to build more and more wind parks and sustain the manufacturing sector here,” Lanard said.
“There are 8,000 parts in an offshore wind turbine,” he said. “I bet right now Maryland has hundreds of companies that could provide those parts for turbine manufacturers.”
Federal regulators have designated 207 nautical square miles off the coast for wind-power generation and the state expects to see the first turbines spinning in 2016.
Lanard said eight companies have submitted proposals for Maryland developments.
Magruder touted the state’s geographic location and the sea and rail shipping infrastructure as a selling point for wind power manufacturers. Existing American firms that build parts for land-based turbines will have to retool to take on offshore turbines, which must be protected from the corrosive salt in the air and water.
“It’s not that we’re going to build turbines here from start to finish,” she said. “We can put the pieces together until they’re as close to ready to go out to sea as possible.”
Del. John A. Olszewski Jr., a Democrat, said he was “encouraged” by the tax credit proposal.
“My hope is that if we can move forward with this we can be a leader in manufacturing again,” said Olszewski, whose Baltimore County district includes the Sparrows Point steel plant. The plant’s steel production lines have been idled by its Russian-based owner. At its peak, Sparrows Point employed more than 30,000.
“It’s a whole new industry, but it uses a product they already produce,” he said. “And it’s only going to grow.”

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