The US government has given offshore wind vessels a leg up in securing financing guarantees.
But funding for the loan guarantee programme remains limited.
The US Maritime Administration (MarAd) has designated wind farm ships “vessels of national interest”, which will give them priority in the agency’s financing programme for ship construction at US yards.
The announcement came after President Joe Biden’s administration forged a partnership with state governors. Biden described the effort as a way not only to tackle carbon but also to create jobs and boost ports.
“When I think ‘climate’, when I think ‘environment’, I think ‘jobs’. Jobs. And these are good-paying jobs, and they’re making a big, big difference,” Biden said of the offshore wind sector.
MarAd, part of the Department of Transportation (DOT), said the new designation for offshore wind vessels will give applications a priority in the Title XI Ship Finance Program, which provides loan guarantees for US vessel construction or retrofits.
A loan backed by Title XI comes with longer terms and lower interest rates than traditional private loans provide.
‘Robust industry’
Deputy transportation secretary Polly Trottenberg said: “From modernising our ports to investing in the US shipbuilding industry to educating the next generation of mariners who will help advance these wind projects, US DOT is helping create both a strong domestic supply chain and a robust US offshore wind industry to help bring costs down for American families and build a clean energy future.”
Title XI was amended in 2019 to designate vessels of national interest as a way to telegraph federal priorities to shipbuilders and shipowners.
Using it for the renewables industry comes as the administration is pushing for 30 GW of offshore wind by 2030, and some of the vessels serving those projects will have to be built in the US because of the Jones Act cabotage law.
But US shipping companies targeting the sector have complained that traditional sources of lending to back vessel construction are unavailable because of the shorter charter contract durations for construction work.
String of orders
Still, a string of crew transfer vessels have been ordered in recent months to serve the first offshore projects in the construction queue — Vineyard Wind in Massachusetts waters and South Fork Wind off New York state.
“We’re excited that some American shipyards have already secured contracts to build vessels to service offshore wind developments,” said maritime administrator Ann Phillips.
“By growing this industry, we further support essential offshore wind installations and continue to add jobs and strengthen our important domestic industrial base, including our shipyards and shipbuilding industry.”
In its latest announcement, what the Biden administration did not do was increase the amount of funding available for the Title XI programme.
As of March, there was $35.5m in loan guarantee cash available in MarAd’s coffers, which could subsidise $475m in loans — roughly the cost of building one wind turbine installation vessel (WTIV) at a US yard.
Jones Act shipping stakeholders have also long complained that applying for Title XI loans is a protracted process that hampers the ability to secure financing in a way that fits with project schedules.
“I’m excited that the Biden Administration and DOT have declared that vessels being built for the new offshore wind industry are deemed to be in the national interest and will have priority for Title XI MarAd loan guarantees,” said Joan Bondareff, a maritime lawyer at US law firm Blank Rome.
She said the US needs more WTIVs for the offshore wind industry to take off. Just one Jones Act-qualified WTIV is under construction in the US, and foreign-flag vessels can operate off the country’s shores only with the aid of feeder vessels to do work protected by the cabotage law.
“I would like to see Congress appropriate additional funds to the Title XI programme with new procedures developed by MarAd to streamline the application process,” Bondareff said.
“Otherwise, the Biden goal of 30 GW of offshore wind and the construction of new vessels will be delayed by practical and financial impediments to the programme.”
Read more
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