Tax Credit Cut for Inland Offshore Wind Projects Under 'Lakes Before Turbines Act', Effective Retroactively to 2023

This bill, titled the "Lakes Before Turbines Act," makes a targeted change to the U.S. tax code. It specifically eliminates the federal Investment Tax Credit (ITC) for offshore wind energy facilities built in what are defined as "inland navigable waters." This change, amending Section 48(a)(5)(F)(ii) of the Internal Revenue Code, applies retroactively to taxable years starting after December 31, 2022.

Unplugging the Incentive for Inland Water Wind

The Investment Tax Credit, or ITC, is essentially a discount on federal taxes designed to encourage companies to invest in certain types of projects, including renewable energy like wind power. This legislation zeroes out that incentive, but only for offshore wind turbines located in bodies of water like the Great Lakes or major inland rivers – think large, navigable freshwater bodies, not the Atlantic or Pacific oceans. By removing this financial carrot, the bill effectively increases the cost for developers looking to build wind farms in these specific inland water locations. The retroactive effective date means projects that might have factored this credit into their planning for tax year 2023 onwards would no longer qualify.

Potential Ripples for Energy Development

Removing the ITC for inland water wind projects could put the brakes on development in these areas. For a company considering, say, a wind project on Lake Michigan, losing this tax credit makes the investment significantly less attractive financially. This could lead to planned projects being scaled back, postponed, or cancelled altogether. While the bill doesn't directly ban turbines, it removes a key financial support mechanism previously available. This could impact not just the energy companies themselves, but also the manufacturing, construction, and maintenance jobs associated with building and operating these specific types of facilities. It raises questions about the future development path for harnessing wind power from large inland lakes and waterways, potentially slowing the expansion of renewable energy sources in regions where such projects might be viable.