September 5, 2013

Dominion Virginia wins right to lease ocean tract for wind farm

By Lenny Bernstein, Published: September 4 | The Washington Post |

Plans for the first offshore wind farm in the region moved forward Wednesday when Dominion Virginia Power won the right to lease nearly 113,000 acres off the Virginia coast to generate power with wind turbines.

The utility outbid Apex Virginia Offshore Wind in a six-round auction held by the Interior Department, paying $1.6 million for the right to install wind turbines 27 miles off the state’s coast. When completed, the project could provide electricity to about 700,000 homes.

Wind turbines on land generate significant amounts of electricity in many states, including Minnesota, Iowa, Texas and Colorado. But the United States, unlike countries in Europe, has not installed a single offshore turbine. Plans are at various stages of development for large wind farms in the waters off Massachusetts, New Jersey, Delaware, Maryland, North Carolina and New York and for small demonstration projects off Maine and Rhode Island.

The largest of those, the Cape Wind project off Massachusetts, has been bogged down in lawsuits. The Maryland lease auction has not been held, but the state has approved legislation sponsored by Gov. Martin O’Malley (D) to assist the eventual developer of the project with financing.

“The administration is obviously committed to looking at all clean-energy alternatives,” said Rob Sargent, energy program director for Environment America, a coalition of 29 environmental advocacy organizations. “The significance of this is yet another step to creating the glide path to tapping this resource of our coast that other parts of the world already are using.”

Another environmental group, the Chesapeake Climate Action Network, contended that Dominion’s long-range energy plan gives higher priority to new fossil-fuel projects than development of offshore wind energy.

Tommy Beaudreau, director of the Interior Department’s Bureau of Ocean Energy Management, which conducted the auction, said in a telephone news conference that “we take diligence on these leases extremely seriously. . . . We will be quite focused on overseeing diligent development.”

Mary C. Doswell, Dominion’s senior vice president for alternative energy solutions, said the company hoped the effort would provide a new way to bring electricity to the state. “Offshore wind has the potential to provide the largest scalable renewable resource for Virginia if it can be achieved at reasonable cost to customers,” she said.

Interior officials said the lease is in an area with high winds but water depths of only about 100 feet, which will not require Dominion to use floating wind turbines. The turbines’ distance from the coast of Virginia Beach should keep them from being visible, they said.

The lease does not preclude other activity, but that area is not considered a section of the ocean ripe for oil and gas exploration, Beaudreau said.

“Virginia’s coast is ideal for wind development,” Gov. Robert F. McDonnell (R) said in a statement.

Interior officials said they have worked with the Defense Department, maritime and fishing interests, and environmental groups to minimize or eliminate conflicts with wind turbines. Later in the development process, they likely will conduct a full environmental impact review to assess other potential problems.

Wednesday’s lease was just the second conducted under the Interior Department’s new policy of putting such sites up for auction rather than working with one potential developer. In July, the department awarded a 165,000-acre tract 10.5 miles south of the Rhode Island coast to Deepwater Wind New England, which submitted the winning bid of $3.8 million.

“I think that what you’re seeing is companies realizing that these sales are real, they’re happening, and they’re happening in relatively quick fashion,” Beaudreau said.

The Justice Department will conduct an antitrust review of Dominion, which has six months to submit a site assessment, he said. After that is reviewed, the company has 4 1/2 years to submit construction plans.

The company can operate the wind farm for 33 years, paying annual rent of nearly $339,000 and an operating fee when it begins to produce power from the site, Beaudreau said.

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