MARAD amends U.S. Federal Ship Financing Program (Title XI), focusing on financial testing, credit, and repayment requirements for marine loans and industry.
Filipe Lewis, Contributor Philip Lewis is Director of Research at Intelatus Global Partners…. December 20, 2023
Offshore wind power is an increasingly popular source of renewable energy around the world. Wind turbines installed at sea have the potential to generate clean energy more consistently than land-based turbines, due to the presence of stronger and more constant winds. Additionally, building offshore wind farms can help reduce dependence on fossil fuels and mitigate the impacts of climate change. Offshore wind energy has the potential to play a crucial role in the transition to a low-carbon economy by providing a source of energy sustainable and reliable.
As changes Recent developments in the offshore wind energy sector have led to greater credit accessibility for offshore wind farm projects. With technological advances and changes in renewable energy policy, requirements for financing offshore wind energy projects have been adjusted to reflect the economic and environmental viability of these projects. This has opened up new opportunities for investors and developers looking to get involved in offshore wind energy projects, further driving the growth of this innovative sector.
Financing offshore wind energy through the Federal Program
Within the Title XI From MARAD, several vessels destined for offshore wind energy have sought federal loans, with Banco Financiador Federal as the lender, ranging from 15 to 25 years, as summarized below.
MARAD Title XI Loans for Offshore Wind Energy Vessels
| MARAD Title XI Offshore Wind Vessel Loans | ||||
|---|---|---|---|---|
| Jar | Type | Vessel owner / Shipyard | CAPEX (millions) |
Loan % |
| ECO Edison | SOC | ECO/Tampa Ship LLC | $97,15 | 93% |
| TBN (10 vessels) | CTV | Windea CTV LLC / St. /> | ||
| TBN | SOV | ECO/LaShip LLC | $108,75 | 88% |
| TBN | Scour | Great Lakes Dredging and Dock / Philly Shipyard | US$ 246,70 | 88% |
| TBN | SOV | Crowley SOV / Fincantieri Bay Shipbuilding | $167,84 | 87% |
| Total | $523,29 | |||
The advantage of Title XI financing is the ability to secure favorable interest rates to finance the majority of a vessel's costs.
Several other ships and shipyards in non-wind upgrade programs other than those shown in the table have submitted Title XI requests. However, Title XI gained greater importance for offshore wind when MARAD announced in 2022 that offshore wind construction and O&M vessels would be designated as vessels of ‘national interest’. In practical terms, this means that offshore wind vessels receive priority treatment over other loan applications for ship and shipyard infrastructure.
Apart from Edison Chouest's order, for which an engagement letter has been issued, all other orders are currently under review.
As a result of the changes, there is hope that conditions will exist for more domestically built offshore wind vessels to be contracted. However, as we discuss in our monthly report on U.S. offshore wind, vessel owners often wait for project developers to make final investment decisions and offer owners vessel redeployment risk mitigation.
Shipbuilding Government update
