Offshore Wind Provisions in the Inflation Reduction Act
INSIGHTi
Offshore Wind Provisions in the Inflation
Reduction Act
Updated September 29, 2022
P.L. 117-169, commonly known as the Inflation Reduction Act of 2022 (IRA), was signed into law on
August 16, 2022. The act contains multiple provisions related to offshore wind, including provisions on
offshore wind leasing, transmission planning, and tax credits.
Offshore Wind Leasing Provisions
Offshore Wind Leasing Authority. Section 50265 of the IRA sets new limits on the Department of the
Interior’s (DOI’s) authority to issue offshore and onshore renewable energy leases. With regard to
offshore wind, during the 10-year period following the IRA’s enactment, DOI’s Bureau of Ocean Energy
Management (BOEM) may not issue a lease for offshore wind development unless the agency has offered
at least 60 million acres for oil and gas leasing on the outer continental shelf (OCS) in the previous year.
This could affect future federal offshore wind leasing efforts as well as decisionmaking for BOEM’s
upcoming offshore oil and gas five-year leasing program. BOEM recently released a proposed program
that considered a range of offshore oil and gas leasing scenarios for the 2023-2028 period, some of which
would offer sufficient sales and acreage to meet the IRA’s criteria for enabling offshore wind leasing
while others would not.
Wind Leasing in the Mid- to South Atlantic and Eastern Gulf of Mexico. On September 8 and
September 25, 2020, President Trump used his authority under Section 12(a) of the Outer Continental
Shelf Lands Act (43 U.S.C. §1341(a)) to withdraw from leasing disposition—from July 1, 2022, through
June 30, 2032—areas off the coasts of North Carolina, South Carolina, Georgia, and Florida in the
Atlantic and off the coast of Florida in the Gulf of Mexico. President Biden announced the
Administration’s interest in furthering offshore wind leasing in the withdrawn areas. Section 50251(a) of
the IRA authorizes the Secretary of the Interior to issue renewable energy leases, easements, and rights-
of-way in these areas despite the presidential withdrawal. Oil and gas leasing remains prohibited in these
areas.
Offshore Wind for U.S. Territories. Section 50251(b) of the IRA amends definitions of the OCS in the
Outer Continental Shelf Lands Act to include specified submerged lands adjacent to U.S. territories. The
IRA directs the Secretary of the Interior to issue calls for interest in offshore wind leasing off territorial
Congressional Research Service
https://crsreports.congress.gov
IN11980
CRS INSIGHT
Prepared for Members and
Committees of Congress
Congressional Research Service
2
coasts and authorizes wind lease sales in areas deemed feasible and of sufficient interest, after the
Secretary has consulted with the territorial governor.
Offshore Wind Transmission Provisions
Interregional and Offshore Wind Electricity Transmission Planning, Modeling, and Analysis. Section
50153 of the IRA appropriates $100 million for convening stakeholders and conducting analysis related to
interregional transmission development and development of transmission for offshore wind energy.
Planning, modeling, and analysis are to take into account factors including the economic, reliability,
resilience, security, public policy, and environmental benefits of interregional electricity transmission and
transmission of electricity from offshore wind energy generation. Specific issues for analysis include the
following, among others:
clean energy integration;
effects of climate change on the reliability and resilience of the grid;
cost allocation methodologies that facilitate the expansion of the bulk power system;
effect of increased electrification on the grid;
benefits of increased grid interconnection;
opportunities for nontransmission alternatives (e.g., energy storage);
economic development opportunities; and
a planned national transmission grid that includes a networked transmission system to
optimize the interconnection of offshore wind farms.
If developed, electricity from offshore wind energy generation, in theory, could be transmitted to any of
the three interconnections (i.e., grids) of the continental U.S. transmission system: the Eastern
Interconnection, the Western Interconnection, and the Electric Reliability Council of Texas. These
interconnections have limited connections among them. The Eastern Interconnection (the largest
interconnection) has multiple regions, and transmission development involving two or more regions is
relatively rare. Some analysis indicates that increased interregional electricity connection could promote
greater use of renewable energy, and an ongoing study will examine the extent that offshore transmission
and coordinated transmission solutions could further offshore wind energy deployment. The IRA provides
funding through Section 50153 for studies and coordination to further inform future transmission
infrastructure development. The IRA contains other provisions related to transmission that also could
have implications for offshore wind development.
Offshore Wind Tax Credit Provisions
Tax Credit for Project Developers. The primary federal tax provision supporting offshore wind is the
energy investment tax credit (ITC). This provision provides a 30% tax credit for offshore wind projects
that begin construction before January 1, 2026. Section 13702 of the IRA provides a new clean electricity
investment tax credit, designed to phase out once greenhouse gas emissions reduction targets are achieved
(i.e., when electric power sector emissions fall to 25% of 2022 levels). The ITC is 6%, with the tax credit
rate increased to 30% for facilities that pay prevailing wages and meet registered apprenticeship
requirements. Projects meeting certain domestic content requirements could be eligible for a bonus credit,
equal to 10 percentage points for projects meeting wage and workforce requirements (or 2 percentage
points otherwise). Section 13801 of the IRA allows certain tax-exempt entities to receive tax credit
amounts as payments (“direct pay”). The ability to receive the credit as direct pay is conditioned on
meeting domestic content requirements, with those requirements becoming more stringent over time.
Congressional Research Service
3
Tax Credit for Manufacturers. Section 13502 of the IRA provides a new tax credit for the domestic
production of wind components and related goods such as specialized offshore wind installation vessels.
For offshore wind vessels, the credit is 10% of the sales price. For other offshore wind components, the
credit is a function of the type of component and the total rated capacity of the project, with credits
available for blades, nacelles, towers, and offshore wind platforms. Taxpayers investing in establishing,
reequipping, or expanding offshore wind energy manufacturing facilities also may be eligible for an
allocation of an advanced energy project credit, as provided in Section 13501 of the IRA.
Further Reading
For background and discussion of offshore wind development on the OCS, see CRS Report R46970,
Offshore Wind Energy: Federal Leasing, Permitting, Deployment, and Revenues. For further discussion of
renewable energy tax credits in the IRA, see CRS Report R47202, Tax Provisions in the Inflation
Reduction Act of 2022 (H.R. 5376).
Author Information
Laura B. Comay
Molly F. Sherlock
Specialist in Natural Resources Policy
Specialist in Public Finance
Corrie E. Clark
Specialist in Energy Policy
Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of
Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However,
as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the
permission of the copyright holder if you wish to copy or otherwise use copyrighted material.
IN11980 · VERSION 6 · UPDATED