Offshore wind is a growing contributor to the energy mix for some nations and has been of interest as a potentially significant renewable energy resource for the United States.¹ The U.S. Department of Energy's (DOE's) National Renewable Energy Laboratory (NREL) has estimated that offshore regions of the contiguous United States and Hawaii have the net technical potential to generate more than 13 million gigawatt hours per year of wind-based electricity—more than three times the electricity used annually in the United States in recent years.² (This estimate takes into account potential technological, environmental, and land-use conflicts but not economic feasibility.) In March 2021, the Biden Administration announced a government-wide effort to deploy 30 gigawatts (GW) of offshore wind energy by 2030.³ In September 2022, the Administration announced a related goal to deploy 15 GW of installed floating offshore wind by 2035.⁴ For comparison, in 2021, the total U.S. utility-scale electricity nameplate generating capacity was approximately 1,242 GW, with more than 133 GW of that capacity (approximately 11%) produced from wind energy resources, virtually all onshore.⁵

Congress has debated whether—and, if so, how and to what extent—to promote the development of U.S. offshore wind. Congress plays a direct role in decisions about wind development offshore due to the federal government's jurisdiction over most of the ocean territory surrounding the United States. The U.S. outer continental shelf (OCS), extending from the outer boundaries of state waters (in most cases, 3 nautical miles [nm] from shore) to at least 200 nm from shore, is federally managed, primarily under the Submerged Lands Act and the Outer Continental Shelf Lands Act (OCSLA).⁶

A 2005 amendment to the OCSLA authorized the Secretary of the Interior to offer leases, easements, and rights-of-way on the OCS for offshore renewable energy activities.⁷ Since then, the Department of the Interior's (DOI's) Bureau of Ocean Energy Management (BOEM) has awarded more than 30 leases for wind energy development in U.S. waters.⁸ To date, no renewable energy projects in federal waters have progressed to the point of electricity generation, except a two-turbine pilot project off the Virginia coast.⁹ In state waters, the five-turbine Block Island Wind Farm off Rhode Island began commercial operations in 2016.

The 117^th Congress conducted oversight and enacted legislation concerning offshore wind development. For example, P.L. 117-169, commonly known as the Inflation Reduction Act of 2022 (IRA), appropriated funding for offshore wind transmission planning and established new tax credits available to offshore wind developers and manufacturers, among other relevant provisions.¹⁰ The 118^th Congress may consider additional issues related to offshore wind leasing, permitting, deployment, and revenues.

Overview of Offshore Wind Technology

Offshore wind power relies on wind farms (collections of wind turbines) constructed in bodies of water that use wind to generate electricity in much the same manner as onshore wind farms. Generally, offshore wind turbines are larger than onshore turbines. Other distinguishing features of offshore wind turbines include the supporting structures or foundations for the turbines and the support vessels required for offshore wind development.

The wind flowing over a body of water turns the blades of an offshore wind turbine; the blades attach to a rotor, which spins a generator to create electricity. The generated electricity then can be delivered to an onshore electrical grid through undersea cables to grid interconnection equipment.¹¹ Key factors that affect the amount of electricity generated from a wind turbine include wind speed, air density, and the swept area of the turbine (the area through which the rotor blades spin). Generally, the faster the wind speed, the denser the air, and the larger the swept area, the more electricity can be generated from the wind turbine.

Different turbine configurations and characteristics can affect performance. As mentioned, offshore wind turbines are typically taller and larger than onshore wind turbine systems.¹² Figure 1 depicts a typical offshore wind turbine configuration.¹³

Fixed-bottom turbine support structures are the predominantly deployed offshore wind technology.¹⁴ These structures, also referred to as foundations, secure the tower with the turbine components to the seafloor (Figure 2). Several types of foundation technologies include monopiles, jackets, and gravity-based foundations. Monopiles, which accounted for approximately 60% of the global operating offshore wind capacity in 2022, are cylindrical structures driven or drilled into the seafloor and attached to the bottom of the turbine tower.¹⁵ Jacket structures, which accounted for more than 10% of the global operating offshore wind capacity in 2022, typically consist of four legs connected by braces and attached via anchors or drilled piles into the seafloor.¹⁶ Gravity-based foundations are placed on the seafloor and rely on the weight of the structure to resist overturning. Fixed-bottom structures were designed for European offshore sites and may not be appropriate for all U.S. offshore sites, due to differences such as water depth, seabed characteristics, and extreme weather conditions.

Figure 1. Offshore Wind Turbine Components

Source: CRS adaptation of illustration from New York State Energy Research and Development Authority (NYSERDA), "Offshore Wind 101," November 2021.

Figure 2. Offshore Wind Structural Support

Source: CRS adapted illustration from Josh Bauer, National Renewable Energy Laboratory (NREL), at https://www.energy.gov/eere/articles/us-conditions-drive-innovation-offshore-wind-foundations.

In addition to fixed-bottom structures, the offshore wind industry is beginning to use floating structures, which are not set into the seafloor but instead have a mooring system that is anchored to maintain a fixed position. Figure 2 depicts several types of fixed-bottom and floating structures. Floating structures are a potential option for projects in deep water (approximately 60 meters or 200 feet in depth, or deeper), such as deepwater areas in the Gulf of Maine and off the Pacific coast and Hawaii.¹⁷ Most planned floating projects use semisubmersible structures; other floating structure designs can include barge, tension leg platform, and spar technology.¹⁸ Tension leg platforms are buoyant structures that have arms connected through tension to a foundation or anchor system.¹⁹ Spar technology relies on spar buoys, ballasted cylindrical buoys that keep the center of gravity below the center of buoyancy.²⁰ Total global floating offshore wind capacity is more than 123 megawatts (MW) (or 0.123 GW).²¹

Leasing and Permitting

BOEM oversees leasing for offshore wind energy on the OCS and has primary responsibility for approving wind projects on developed leases.²² BOEM granted its first leases for wind energy development in 2009 and administered 33 active wind leases as of August 2023.²³ BOEM characterizes its commercial wind leasing and permitting process as consisting of four broad phases: planning and analysis; leasing; site assessment; and construction and operations.²⁴ In January 2023, BOEM proposed regulatory changes that would alter some steps in the process (for instance, to reflect current technologies and practices or to alter steps identified by developers as overly burdensome), while retaining the overall four phases.²⁵

In the planning and analysis phase, BOEM seeks industry interest in wind leasing by publishing a call for information and nominations for a selected offshore area, known as a call area.²⁶ Wind energy developers and other stakeholders—such as state and tribal governments, natural resource agencies, and other ocean users—may provide comments at the call stage. Based partly on the feedback received, BOEM may identify, within the call area, targeted wind energy areas (WEAs) that appear "most suitable" for leasing.²⁷ The WEA identification process includes public input and environmental evaluation under the National Environmental Policy Act (NEPA).²⁸ Over the past decade, BOEM has identified call areas and WEAs in multiple locations off the Atlantic and Pacific coasts, off Hawaii, and in the Gulf of Mexico (Figure 3).

In the second phase (the leasing phase), BOEM determines if there is competitive interest in leases within the WEAs by publishing a request for interest in the Federal Register. If there is competitive interest, BOEM holds a lease auction.²⁹ To date, BOEM has held 12 offshore wind lease auctions, 10 in the Atlantic region, 1 in the Pacific region, and 1 in the Gulf of Mexico region. The lease auctions may use any of several formats, as provided in BOEM regulations.³⁰ Recent auctions have used a "multiple-factor" bidding format, in which bidders may receive credit for specified factors in addition to their cash bid—for example, for commitments to invest in activities that build domestic supply chains or train U.S. workers in the offshore wind industry.

In the third phase, a company that has obtained a lease conducts site assessment activities—for example, constructing a meteorological tower or installing meteorological buoys to estimate wind resources. Currently, developers must prepare a site assessment plan (SAP) and obtain BOEM approval for these activities through a process that includes environmental review under NEPA.³¹ BOEM's proposed regulatory changes would eliminate the need for SAPs in many circumstances, although permits could still be needed from other agencies for some site assessment activities.³²

The final phase is the construction and operations phase, in which the lessee builds and operates the wind facility after obtaining BOEM's approval of its construction and operations plan (COP) along with necessary permits from other federal agencies.³³ The COP approval process requires additional environmental review and public comment. To date, BOEM has approved four COPs, and construction has begun on two leases. Other COPs are at various review stages.

Figure 3. Map of BOEM's Renewable Energy Leases and Planning Areas

Source: Bureau of Ocean Energy Management (BOEM), "Outer Continental Shelf Renewable Energy," 2023, at https://www.boem.gov/sites/default/files/documents/renewable-energy/All-States-Poster_0.pdf. Note: Map includes offshore wind leases and planning areas, along with a limited research lease for the PacWave offshore wave energy project off the Oregon coast.

Lease Sale Scheduling

Congress has expressed interest in the frequency and regularity with which BOEM schedules offshore wind lease sales under its current process. Unlike for oil and gas—where the OCSLA requires BOEM to prepare comprehensive five-year leasing programs that evaluate all available areas to determine when and where lease sales will take place—offshore wind lease sales are scheduled individually, based on either unsolicited lease applications or area evaluations undertaken at BOEM's discretion.³⁴ Under this process, BOEM has conducted 12 competitive wind lease sales in total (typically awarding multiple leases at each sale), and the frequency of lease sales has varied. For instance, BOEM held one wind lease sale in each of 2016, 2017, and 2018; none in 2019, 2020, or 2021; three in 2022; and one to date in 2023.³⁵

Some Members of Congress and other stakeholders have advocated for greater predictability and regularity in BOEM's offshore wind leasing program.³⁶ They contend that a more comprehensive program would ensure a consistent offshore wind supply, facilitate state clean energy targets, and spur supply chain investments.³⁷ A five-year planning requirement akin to that for the offshore oil and gas program also could result in broader-scale environmental evaluations of offshore wind at a programmatic level, whereas the current process is more focused on evaluating individual leases and projects.³⁸ Others have expressed concern about a standardized leasing process for offshore wind, arguing for the importance of maintaining flexibility in scheduling lease sales.³⁹

BOEM's January 2023 proposed regulatory changes would include publication by the agency of periodic proposed five-year leasing schedules for the renewable energy program.⁴⁰ BOEM states that the schedules would provide "increased certainty and enhanced transparency, and facilitate planning by industry, the States, and other stakeholders."⁴¹ The renewable energy leasing schedules would differ from oil and gas five-year programs; for instance, they would not have public comment requirements, and BOEM would appear to have more flexibility to deviate from the schedules than is provided in OCSLA for the oil and gas program. Based on BOEM's description in the proposed rule, it appears that the proposed schedules likely would not involve preparation of a programmatic environmental impact statement (EIS) under NEPA. Absent a programmatic EIS, the proposed schedules may play a limited role in addressing the concerns of those who seek to shift evaluation of the impacts of OCS offshore wind leasing to a broader, programmatic level.

A separate issue concerns restrictions on offshore wind lease sales imposed by P.L. 117-169, the IRA.⁴² For the 10 years following that law's August 2022 enactment, BOEM may not issue offshore wind leases unless an offshore oil and gas lease sale meeting certain criteria has been held in the previous year. In the 118^th Congress, H.R. 4936 would repeal this provision.

Regional Leasing Decisions

BOEM and NREL have explored possibilities for wind development in all four of the federal offshore regions administered by BOEM: the Atlantic, Pacific, Gulf of Mexico, and Alaska regions.⁴³ Most of the leasing to date has been in the Atlantic region. BOEM held a lease sale in the Pacific region in December 2022 and a sale in the Gulf of Mexico region in August 2023.

• Atlantic Region. The Atlantic OCS, especially off the northeast coast, has strong average wind speeds (Figure 4) and relatively high wind energy potential.⁴⁴ Multiple East Coast states have committed to sourcing portions of their overall power from renewable sources in general or offshore wind in particular. Compared with some other parts of the country, the region has relatively little land available for onshore renewable development, making offshore development potentially attractive. The ocean depth in many places allows for use of fixed-bottom foundations.⁴⁵ BOEM has awarded wind leases off the coasts of Delaware, Maryland, Massachusetts, New Jersey, New York, North Carolina, Rhode Island, South Carolina, and Virginia and has initiated planning for leasing in the Gulf of Maine.⁴⁶ In August 2022, the IRA authorized potential further leasing in the southern Atlantic, reversing an earlier ban by President Trump.⁴⁷ Some support additional Atlantic lease sales, for example, to facilitate state renewable power goals and generate employment in the offshore wind sector. Others advocate for limiting further wind leasing in the Atlantic, in consideration of potential conflicts with fishing and defense activities and potential environmental impacts of development (see discussion below).⁴⁸
• Pacific Region. BOEM held its first offshore wind lease sale for the Pacific region in December 2022, for two wind energy areas off the northern and central coasts of California.⁴⁹ Some observers have identified California as a promising area for offshore wind, particularly because the populous state has committed to source 100% of its electricity from zero-carbon sources by 2045.⁵⁰ Because water depths drop rapidly off the California coast, projects in federal waters likely will require floating wind turbines; this technology has not been deployed in the United States and is costlier than the fixed-bottom turbines usable in shallower waters.⁵¹ BOEM also has taken preliminary steps toward wind lease sales off the coasts of Oregon and Hawaii, which also would be expected to require floating turbines.⁵²

Figure 4. U.S. Offshore Wind Speed Estimates (top figure shows continental United States and Hawaii; bottom figure shows Alaska)

Sources: National Renewable Energy Laboratory (NREL), 2016 Offshore Wind Energy Resource Assessment for the United States, Technical Report NREL/TP-5000-66599, September 2016, p. 9, at https://www.nrel.gov/docs/fy16osti/66599.pdf; and NREL, Offshore Wind Energy Resource Assessment for Alaska, Technical Report NREL/TP-5000-70553, December 2017, p. v, at https://www.nrel.gov/docs/fy18osti/70553.pdf. Notes: Figures show estimated annual average wind speeds at 100 meters above the ocean surface, a typical height for offshore wind turbine hubs; nm = nautical miles; m/s = meters per second.

• Gulf of Mexico Region. BOEM held an August 2023 lease sale for the Gulf of Mexico region. One lease was awarded off the coast of Lake Charles, LA; two leases off the coast of Galveston, TX, did not receive bids.⁵³ A study by BOEM and NREL found the Gulf advantageous for offshore wind development in several ways.⁵⁴ For example, the robust supply chain for offshore oil and gas in the region—which could be transitioned for wind development—could lower costs for fabrication, installation, and maintenance of offshore wind infrastructure. The Gulf's shallow waters, mild temperatures, and relatively low average wave heights also could facilitate turbine siting and accessibility for maintenance. However, the study also identified challenges for offshore wind in the Gulf, particularly the need to adapt wind technologies to withstand the region's hurricane potential, relatively low average wind speeds (Figure 4), and soft soils on the seafloor. Additionally, most Gulf states do not have renewable energy mandates,⁵⁵ although some have expressed interest in offshore wind development in the region.⁵⁶ A specific issue is whether wind leasing should be permitted in the Eastern Gulf offshore of Florida—an area of active military testing and training. The IRA opened this area for wind leasing;⁵⁷ some 118^th Congress legislation (H.R. 970, S. 279) would prohibit wind leasing in this area for a specified time period. More broadly, the general development of U.S. offshore wind has been of interest to Gulf states owing to potential economic opportunities the new industry could create for Gulf-based businesses that traditionally have served the offshore oil and gas industry. For example, facilities in the Gulf are participating in developing U.S. offshore wind supply vessels for projects in the Atlantic region (see section on "Deployment Issues," below).⁵⁸
• Alaska Region. An NREL assessment found that Alaska has a technical offshore wind resource capacity larger than that of all other U.S. states combined.⁵⁹ However, the study also identified "significant challenges [that] inhibit large-scale offshore wind deployment in Alaska," including the "remoteness" of the offshore wind resources, their distance from load centers in the state, and the "wealth of land" available for onshore wind development.⁶⁰ Alaska has a goal to supply 50% of its electricity from renewable sources by 2025 and has pursued hydropower, biomass, and onshore wind projects, among others.⁶¹ BOEM has not undertaken any offshore wind leasing activities in Alaska to date.

Permitting Decisions

To date, DOI has approved four construction and operations plans (COPs) for offshore wind projects—the COP submitted by Vineyard Wind, LLC, for the Vineyard Wind 1 project off the coast of Massachusetts; the COP submitted by South Fork Wind, LLC, for the South Fork Wind Farm, located off the coasts of Rhode Island and Massachusetts and supplying power to New York; the COP submitted by Ocean Wind, LLC, for the Ocean Wind 1 Offshore Wind Farm off the coast of New Jersey; and the COP submitted by Revolution Wind, LLC, for the Revolution Wind Farm, located off of the coast of Rhode Island and supplying power to Rhode Island and Connecticut.⁶² DOI's approval of a COP, along with accompanying authorizations by other agencies, enables wind turbine construction and operations.⁶³ BOEM is working to complete review of pending COPs for other projects. By 2025, the agency anticipates completing review of "at least 16 construction and operation plans that could provide up to nearly 27 GW of new clean energy."⁶⁴

Some offshore wind developers and other stakeholders contend that BOEM's review process has been unnecessarily slow, causing project delays.⁶⁵ Congress has considered whether BOEM needs additional staff and financial resources to review the growing number of submitted COPs. In Interior appropriations acts for FY2020-FY2023, Congress increased appropriations to BOEM's Renewable Energy account, in part to improve permitting capacity for offshore wind projects.⁶⁶ For FY2024, BOEM requested an increase of 51% over FY2023 funding for the Renewable Energy account to support "expeditious and efficient" permitting, among other purposes.⁶⁷ Many offshore wind projects are covered under Title 41 of the Fixing America's Surface Transportation Act (FAST-41; P.L. 114-94), which requires coordination of federal agency review for covered projects.⁶⁸ Broader permitting reform provisions proposed or enacted in the 118^th Congress also could affect the COP review process for offshore wind.⁶⁹

Other stakeholders have expressed the opposing concern that BOEM's permitting of offshore wind projects is proceeding too quickly, with insufficient consideration of conflicting ocean uses and the environmental impacts of wind development. House-passed legislation in the 118^th Congress would require the Government Accountability Office (GAO) to "assess the sufficiency of the environmental review processes for offshore wind projects," with attention to impacts of development on marine wildlife, commercial and recreational fishing, and military use of the ocean, among other factors.⁷⁰

Fishing Industry Concerns

Commercial fishing groups have expressed concerns about potential impacts to their industry from offshore turbine construction and operation on the OCS, including potential effects on fish stocks and fishing vessel navigation, among others.⁷¹ Some groups have questioned whether BOEM may be using incomplete data on fisheries or gathering insufficient input from seafood industry groups, when making leasing decisions.⁷² Partly in response to such concerns, BOEM undertook a supplement to its EIS for the Vineyard Wind 1 COP to consider cumulative impacts of potentially widespread wind development throughout the Atlantic region.⁷³ BOEM also has completed other studies and has engaged with the fishing industry through workshops and public meetings.⁷⁴ The U.S. Coast Guard has studied turbine spacing and vessel transit in Atlantic wind lease areas and has issued turbine spacing recommendations, some of which have been contested by fishing groups.⁷⁵ DOI generally has relied on Coast Guard recommendations when stipulating distances between turbines as part of the COP approval process.⁷⁶

BOEM and other stakeholders have considered ways to address potential adverse effects of offshore wind development on fishermen. In June 2022, BOEM sought feedback on draft guidelines for offshore wind lessees to mitigate impacts of their activities on commercial and recreational fisheries, including through financial compensation.⁷⁷ Some offshore wind developers already have pursued financial compensation arrangements with area fishermen.⁷⁸ Most recently, in its final sale notice for the Gulf of Mexico wind lease sale, BOEM offered a 10% bidding credit for bidders who commit to contribute to a fisheries compensatory mitigation fund "to mitigate potential negative impacts to commercial and for-hire recreational fisheries."⁷⁹

Offshore Wind and Marine Wildlife

Federal agencies and other researchers are studying the effects of offshore wind energy development on marine wildlife, including birds, marine mammals, sea turtles, fish, and other species.⁸⁰ For example, researchers have studied potential impacts from animals' collisions with turbines or construction vessels, noise associated with project construction and operations, habitat displacement, changes in prey availability, and effects from the electromagnetic fields emitted by power transmission cables. Some researchers also have pointed to potential benefits to marine wildlife from offshore wind development, including direct benefits, such as artificial reef development on offshore wind structures, and indirect benefits stemming from offshore wind's potential to reduce greenhouse gas emissions.

When leasing and permitting for offshore wind development, federal agencies must adhere to statutory requirements related to wildlife. For example, NEPA requires agencies to assess potential effects on wildlife in environmental analyses of offshore wind lease sales, plans, and permits. Some species also are protected under other statutes, such as the Marine Mammal Protection Act, Endangered Species Act, and Migratory Bird Treaty Act.⁸¹

In records of decision (RODs) issued for offshore wind projects to date, DOI and cooperating agencies have required mitigation, monitoring, and reporting to reduce potential harm to wildlife.⁸² For instance, a developer's mitigation activities could include installing bird deterrent devices on turbines, adopting best management practices for construction, and adhering to seasonal work restrictions to protect marine wildlife at sensitive life stages, among others. Some stakeholders have expressed concern that projects nonetheless would cause unacceptable harm to marine wildlife and have sought further actions such as a GAO study of offshore wind's environmental impacts.⁸³ Federal agencies including the National Oceanic and Atmospheric Administration (NOAA) also continue to assess a variety of potential impacts, including those related to protected species.⁸⁴

Department of Defense Activities

Offshore wind development could affect uses of the ocean by the Department of Defense (DOD). For example, wind turbine generators could affect the radar performance of DOD vessels or could physically obstruct testing and training areas.⁸⁵ BOEM has stated that it "will work with the Department of Defense to ensure long-term protection of military testing, training and operations, while pursuing new domestic clean energy resources."⁸⁶ BOEM's offshore wind leases, like its oil and gas leases, typically provide for the temporary suspension of lease operations and/or evacuation of lease areas for national security and defense reasons in accordance with applicable laws and regulations.⁸⁷ Some stakeholders seek additional study of the potential impacts of offshore wind on defense activities and/or further restrictions on development to protect DOD operations.⁸⁸

An example of BOEM-DOD cooperation is from May 2021, when BOEM announced an agreement under which the agency, in partnership with DOD and the State of California, identified two potential wind energy areas off the central and northern coasts of California.⁸⁹ In that case, DOD had expressed concerns about potential conflict between offshore wind development and military training and readiness activities in these areas, especially off the central coast.⁹⁰ More recently, DOD has reportedly identified "complicated compatibility challenges" with proposed wind lease areas in the Central Atlantic, including potential conflicts with flight training operations.⁹¹

Another example of interagency cooperation is the Wind Turbine-Radar Interference Mitigation Working Group. BOEM, DOD, DOE, the Federal Aviation Administration, and NOAA signed a memorandum of understanding "to mitigate the technical and operational impact of wind turbine projects on critical radar missions."⁹² The working group aims, by 2025, to "address wind turbine radar interference as an impact on critical radar missions, ensure the long-term resilience of radar operations in the presence of wind turbines, and remove radar interference as an impediment to future wind energy development."⁹³

Visibility of Infrastructure from Shore

Some individuals and communities have objected to proposed offshore wind projects because of their potential obstruction of the seascape.⁹⁴ In response to such concerns, DOI sometimes has identified areas where no wind turbines would be allowed, in order to reduce concerns about visibility. For example, DOI's ROD for the Vineyard Wind project identified areas where "surface occupancy" (i.e., placement of wind facilities) was prohibited in order to reduce the project's visibility from shore.⁹⁵

A 2021 BOEM study cited multiple potential strategies for mitigating visual impacts from offshore wind facilities.⁹⁶ These could include, for example, having landscape professionals participate in the project siting and design process, using intervening geographical features such as headlands to screen project views, siting turbines so as to minimize horizontal spread of the layout when viewed from shore, controlling project footprints during the construction phase, using nonreflective paints and coatings for turbines that match the color of the sea, using aircraft lights that turn on only when an aircraft is in range, and other potential strategies.

In evaluations of project developers' COPs, DOI has weighed visibility concerns against other priorities such as the statutory mandate to prevent "waste" of OCS resources in renewable energy leasing.⁹⁷ For example, in its ROD for the Ocean Wind 1 project, DOI rejected an assessed alternative that would have increased the distance of the nearest-shore turbine from 13.3 to 14.0 nm from shore. In rejecting the alternative, DOI stated that this "minimal change" would have done "little to reduce" effects to scenic and visual resources, but would have resulted in a reduction of up to 14% in expected annual energy production.⁹⁸

Deployment Issues

Congress may consider multiple issues pertaining to deployment of offshore wind energy projects. It is estimated that to meet the Biden Administration's goal to deploy 30 GW of offshore wind energy by 2030, infrastructure requirements will include more than 2,100 wind turbines and foundations, more than 6,800 miles of cables, and several different types of vessels.⁹⁹ If this infrastructure buildout depended on the development of a domestic supply chain, one study estimates that it would require at least 34 new manufacturing facilities to meet demand in 2030 and an investment of more than $22.4 billion in manufacturing facilities, ports, and large installation vessels.¹⁰⁰ Potential issues relate to domestic capacity for construction and installation of offshore wind infrastructure in the coming years, and to the ability to sell into domestic electricity markets.

Jones Act and Port Infrastructure Considerations

The Jones Act requires that vessels transporting cargo from one U.S. point to another U.S. point be (1) U.S.-built and (2) owned and crewed by U.S. citizens. Under the Jones Act, vessels carrying offshore wind supplies and vessels for offshore wind turbine installation that travel from U.S. ports to project sites on the OCS must be built in the United States, registered under the U.S. flag, and owned and crewed by U.S. citizens.¹⁰¹ GAO reported in December 2020 that the United States had no domestic-built vessels capable of transporting and installing wind turbines of the size planned for many upcoming projects.¹⁰² The GAO report described two potential strategies for wind developers to comply with the Jones Act. In the first strategy, a Jones Act-compliant wind turbine installation vessel (WTIV) would carry turbine components from a U.S. port to the project site and install them. In the second strategy, a foreign-flagged vessel would travel from a foreign port to install the turbines, but a Jones Act-compliant feeder vessel would transport the components to the site from a U.S. port.¹⁰³ In both scenarios, stakeholders identified a need to build new Jones Act-compliant vessels, especially to handle increasingly large turbine components expected to be used in future projects.

The earliest planned offshore wind projects on the OCS are using the second strategy—transporting components with Jones Act-compliant vessels and installing them with separate, foreign-flagged WTIVs—because the United States does not yet have any completed Jones Act-compliant WTIVs. For instance, operators of the Vineyard Wind 1 project announced their use of a WTIV operated by the Belgian-based DEME Group, installing turbine components transported to the site by Jones Act-compliant feeder vessels.¹⁰⁴ Legislation in the 118^th Congress could potentially affect this strategy.¹⁰⁵ Dominion Energy is constructing the first Jones Act-compliant offshore WTIV, targeted for completion in 2024.¹⁰⁶

Congress may consider whether to incentivize U.S. vessel construction through financial assistance, job training programs,¹⁰⁷ or other mechanisms and whether to provide infrastructure funding for U.S. port facilities that could serve as staging areas for offshore wind installation activities.¹⁰⁸ Relatedly, Congress may consider the effectiveness of incentives enacted in the IRA that provide a new tax credit for the domestic production of wind components and related goods such as specialized offshore wind installation vessels.¹⁰⁹ Other considerations may include whether to introduce additional requirements; for example, some states have required hiring priorities for companies developing offshore wind projects.¹¹⁰ Another option could be to amend the Jones Act to exempt the offshore wind industry. For further discussion of offshore wind vessel issues, see CRS In Focus IF12491, Vessel Construction for Offshore Wind Power Generation.

Electricity Transmission Considerations

With offshore wind projects moving forward in the Atlantic region, some stakeholders have identified potential issues with access to markets to sell the generated electricity. One potential challenge is ensuring the markets operate in a manner that is competitive to both new generators (e.g., offshore wind farms) and existing generators. Another potential challenge is ensuring there is sufficient infrastructure and demand in place to accept the generated electricity and direct the electricity to consumers.

Access to markets is a key consideration for the success of the offshore wind industry. According to DOE, "[capital expenditures] (CapEx) are the single largest contributor to the life cycle costs of offshore wind power plants and include all expenditures incurred prior to the start of commercial operation."¹¹¹ CapEx data are typically self-reported by developers; because of this, the data are uncertain. According to DOE, the capacity-weighted average CapEx for offshore wind projects was approximately $3,550/kilowatt (kW) in 2022 globally and about $4,000/kW in European and U.S. markets.¹¹² NREL researchers have estimated that both CapEx and operation and maintenance expenditures for offshore wind installations were more than twice those for onshore wind installations in 2019.¹¹³ Because the majority of costs are upfront expenditures, the financing rate of an offshore wind project can affect the lifetime project costs considerably. Some developers have sought to renegotiate power purchase agreements or terminate and rebid procurement in response to concerns about interest rates, inflation, and supply chain disruptions.¹¹⁴ As a result, some state regulators are considering to what extent ratepayers' interests should be prioritized over meeting state renewable energy goals.¹¹⁵

Congress may consider whether incentives enacted in Section 13702 of the IRA that provide a 30% tax credit for offshore wind projects that begin construction before January 1, 2026, are effective.¹¹⁶

Electricity Markets

Offshore wind projects may encounter issues with access to markets to sell the generated electricity. One challenge involves ensuring market competitiveness for both existing generators and new generators, such as offshore wind farms. Regional transmission organizations (RTOs) and independent system operators (ISOs) manage the electric transmission systems and the competitive wholesale electric energy markets, under the Federal Energy Regulatory Commission's (FERC's) oversight.¹¹⁷ Some regions are outside of these markets, including much of the Northwest, Southwest, and Southeast. RTOs and ISOs generally run several markets to ensure enough generation is available to reliably meet power demands. Some RTOs and ISOs use forward capacity markets to ensure sufficient generation will be available years in the future. As RTOs and ISOs developed these markets, some participants and observers raised concerns that states could incentivize new generation, which could undermine competitiveness, enabling new generators to submit artificially low offers.¹¹⁸ Some states have set offshore wind procurement goals and have encouraged utilities to enter into power purchase agreements with offshore wind projects.¹¹⁹ These long-term contracts, in addition to other state legislative or executive policies in support of offshore wind, could be considered "subsidies" to offshore wind projects, thus potentially allowing offshore wind developers to sell into electricity markets at lower prices than other types of generators could offer. To address concerns of artificially low prices, RTOs and ISOs may have a minimum offer price rule (MOPR), which is a specific minimum dollar amount that a resource can offer into the capacity market. Several RTOs and ISOs implement MOPRs.

In the Atlantic region, some have expressed concerns that MOPRs could undermine state clean energy goals and negatively affect offshore wind industry development.¹²⁰ Central to the debate is a state's authority under the Federal Power Act over in-state generation facilities, as opposed to FERC's exclusive authority over sales in interstate wholesale electricity markets.¹²¹ Congress may consider whether states can provide incentives in federal competitive markets. Congress also may consider whether clean energy generation is a national goal and whether to establish a national clean energy standard, which could affect the pace of offshore wind deployment.¹²²

Connections to the Electrical Grid

With interest in developing offshore wind resources, stakeholders including regulators and system operators are concerned about connecting offshore wind farms to existing transmission and distribution infrastructure.¹²³ One approach is to connect wind projects to onshore electric grid infrastructure as the projects are individually approved and developed (which was the approach used for the Block Island Wind Farm and the Dominion Coastal Virginia Offshore Wind pilot project). Another potential approach is to connect multiple wind projects to transmission infrastructure that would be built offshore, forming either a meshed network of groups of wind farms or a transmission backbone that could deliver electricity from many groupings of wind farms, or a combination of the two approaches.¹²⁴ By building transmission infrastructure offshore and connecting to onshore electric grids at multiple points, the costs of transmission can be shared among multiple offshore wind projects. A meshed network or backbone attached to onshore grids at multiple points also could address potential reliability and congestion issues within a region. Such offshore transmission configurations could be managed privately or publicly.¹²⁵

One option is for BOEM to authorize one or more private entities to develop an offshore transmission backbone or meshed network on the OCS. For example, in June 2019, BOEM published a request for competitive interest in commercial renewable energy transmission on the OCS offshore of New York and New Jersey.¹²⁶ The request was triggered by a proposal from a private developer, Anbaric Development Partners, LLC, to build an offshore network of subsea transmission cables, including up to eight offshore collector platforms that would collect power generated from offshore wind facilities and distribute it to landings at locations from Massachusetts to the Long Island Sound.¹²⁷

Another option is for the federal government to develop and manage an offshore transmission backbone.¹²⁸ Such an approach could be modeled on other federal onshore projects involving electricity generation and transmission. One example for a federal government model generation and transmission system is the Western Area Power Administration, which is one of four power marketing administrations (PMAs) under DOE that markets and transmits power from federally owned and operated hydropower projects.¹²⁹ In general, the PMAs came into being because of the government's need to dispose of electric power produced by dams constructed largely for irrigation, flood control, or other purposes and to promote small community and farm electrification—that is, to provide service to customers whom it would not have been profitable for a private utility to serve. The government created the PMAs to market federal power and share the common mission of providing electricity at cost-based rates with preference to public customers.¹³⁰ Another example is the Tennessee Valley Authority (TVA), a federal government corporation created by Congress in 1933. The preamble to the TVA Act of 1933 lists flood control, reforestation, and agricultural and industrial development as primary considerations in the original establishment of TVA.¹³¹ Congress established TVA to "exist in perpetuity."¹³² Although TVA's activities initially focused largely on flood control and economic development, TVA is now essentially a power generation company. Its business metrics focus on optimizing TVA's financial position, and its operational goals focus on providing electricity at the lowest feasible rates to its wholesale customers in the multistate Tennessee Valley region.¹³³

Without a sufficient number of offshore wind projects for a coordinated offshore grid, offshore wind projects likely will be integrated by generator interconnections, which could result in a combination of many connections to the electric grid.¹³⁴ On the one hand, the use of separate interconnections for each generator is straightforward and reportedly has been the approach for many offshore wind projects in the United States and Europe.¹³⁵ On the other hand, large numbers of individual connections to the onshore electric grid could complicate landfall connections and transmission planning. Some states have analyzed the potential effects of different offshore transmission options.¹³⁶ DOE has funded studies to examine coordinated transmission options for offshore wind energy along the Atlantic Coast and along the West Coast.¹³⁷

Congress may consider whether the federal government would incentivize offshore transmission infrastructure development and to what extent that development could be coordinated. Section 50153 of the IRA provided $100 million in funding to DOE for convening stakeholders and conducting analysis related to interregional transmission development and development of transmission for offshore wind energy.¹³⁸

Offshore Wind Revenues

DOI's Office of Natural Resources Revenue (ONRR) collects several types of revenue during the offshore wind leasing process.¹³⁹ When BOEM holds a lease sale, the winning bidder pays the bid amount (known as a bonus) to the federal government. A second type of revenue is rents, which developers pay annually on a lease prior to the stage when a project begins commercial operations. Under BOEM regulations, annual rents on commercial offshore wind leases are set at $3 per acre, unless otherwise specified in the lease or final sale notice.¹⁴⁰ Third, developers pay an operating fee (similar to an oil and gas royalty) on electricity produced from an operating wind facility. The operating fee is calculated based on the nameplate capacity of the facility, a capacity factor representing the anticipated efficiency of facility operations (e.g., accounting for fluctuations in wind speeds), and the annual average wholesale electric power price in the state where the transmission cable makes landfall for each year that the operating fee applies.¹⁴¹ ONRR also records other types of offshore wind revenue, such as settlement agreements and interest payments, in its other revenues category.

Federal revenues from OCS offshore wind have varied annually (Table 1). Revenues to date have been from bonus bids, rents, and other sources but not from operating fees, because no projects are yet commercially operating in federal waters. Offshore wind revenues in FY2022 were much higher than in previous years, owing to bonus bids received at wind lease sales. A February 2022 lease sale for the New York Bight yielded $4.370 billion in bonus bids, and a May 2022 lease sale in the Carolina Long Bay area brought in $315 million.¹⁴²

Under the OCSLA, revenues collected from offshore wind projects that lie within 3 nm of state waters are shared with adjacent coastal states at a rate of 27%.¹⁴³ To date, Massachusetts and Rhode Island have received revenue-sharing payments in some years under this provision, with no payment totaling more than $25,000 in any year.¹⁴⁴ For projects farther from state waters—almost all the projects to date—all revenues are deposited in the U.S. Treasury as miscellaneous receipts. This disposition differs from that for offshore oil and gas leases. Oil and gas revenue sharing for projects within 3 nm of state waters is similar to that for wind (revenues are shared at a rate of 27% with coastal states), but there is additional revenue sharing for oil and gas leases farther from shore under the Gulf of Mexico Energy Security Act of 2006 (GOMESA).¹⁴⁵ GOMESA provides for revenues from qualified oil and gas leases in broad areas of the Gulf of Mexico to be shared with eligible Gulf states at a rate of 37.5%, up to a legislated cap.

Some Members of Congress seek a revenue-sharing arrangement for offshore wind leases similar to that provided by GOMESA for qualified oil and gas leases, or alternatively seek to raise the amounts shared with states from both wind and oil and gas leasing.¹⁴⁶ Some also have proposed using offshore wind revenues to fund specified federal programs, such as the National Oceans and Coastal Security Fund or the North American Wetlands Conservation Fund.¹⁴⁷

Some stakeholders who favor the reduction of federal oil and gas leasing have considered whether offshore wind revenues could be a potential future funding source for federal programs that currently rely on offshore oil and gas revenues, such as the Land and Water Conservation Fund and the Historic Preservation Fund.¹⁴⁸ Prior to FY2022, revenues from offshore wind leasing had been considerably less than revenues from offshore oil and gas leasing.¹⁴⁹ For FY2022, the high bonus bids from lease sales made offshore wind revenues more comparable with those from offshore oil and gas leasing, with oil and gas totaling $6.537 billion while wind totaled $4.639 billion. However, DOI does not expect future offshore wind revenues over the coming decade to match the FY2022 wind totals. For instance, BOEM's two wind lease sales to date in FY2023, for California and Gulf of Mexico, received a combined $757.1 million in high bids (almost all from the California sale).¹⁵⁰ In its FY2024 budget justification, DOI projected annual revenues from offshore wind ranging from $170 million to $823 million for the FY2024-FY2028 period.¹⁵¹