Following a new initiative announced by the White House and the governors of 11 states to accelerate the development of the offshore wind sector, MARAD is prioritizing the Title XI funding program for vessels in the offshore wind sector. The Department of Transport has designated the offshore wind vessels as “Vessels of National Interest” to expedite their review and funding under the existing financial support program.
MARAD said in announcing the designation which will further facilitate offshore wind construction and prioritize applications for such projects for review and funding through Title XI. Currently, MARAD reports that the approximate grant available for Title XI is $35.5 million, as of March 2022. Based on average risk for projects previously guaranteed by MARAD, this could support approximately $475 million in new loan guarantees.
The Title XI program assists the domestic shipbuilding industry by helping US shipyards upgrade facilities, build and upgrade ships, and help US shipowners profitably purchase new domestically produced vessels. It can provide a loan of trust and credit at longer terms and at a lower interest rate than traditional private loans. To date, Title XI has provided $9.3 billion in loan guarantees.
Title XI law was amended in 2019 to add the power to designate vessels of national concern. Such designation informs and encourages shipbuilders and shipowners that DOT/MARAD will prioritize and expedite applications for loan guarantees for offshore wind-related vessels.
“We are delighted that some US shipyards have already been awarded contracts to build vessels to service offshore wind developments,” said Maritime Administrator Ann Phillips. “By developing this industry, we are further supporting essential offshore wind installations, and continue to create jobs and strengthen our important national industrial base, including our shipyards and shipbuilding industry.”
Yesterday, the Biden administration announced the new Federal-State Offshore Wind Implementation Partnership that will accelerate the growth of the offshore wind industry. The effort, which focuses on building the supply chain for offshore wind, including the vessel needed for installation and maintenance, is in response to reports that cite a lack of a national plan to support the target of 30 GW of offshore wind power generation by 2030.
Demand from the emerging sector is contributing to the growth of shipbuilding and port development work. Since the United States applies the Jones Act to the offshore wind sector in the same way it has been used in the offshore oil and gas sector, it should contribute to new shipbuilding orders. So far, Dominion Energy has ordered the first installation vessel from Keppel AmFELS and Philly Shipyard is building an underwater rock installation vessel for Great Lakes Dredge & Dock Company. Most of the orders were for smaller crew and support vessels, with analysts warning that there won’t be enough installation vessels to meet demand from wind farm projects currently in the planning stages.
The White House and MARAD expect the new initiative to help generate more shipbuilding orders to support the offshore wind industry, driving work in shipyards and for sailors.