Dominion Resources may install offshore wind turbines that are less technologically advanced as part of its plan to cut costs after the bid for a test project off the Virginia coast came in at nearly double the company’s $230 million estimate.
The state’s largest utility is also holding out hope that financial support from federal, state or industry groups will save the stalled project.
Dominion had planned to install two 6-megawatt turbines in federal waters about 24 miles off Virginia Beach, but the only bid it received for the work had a $375 million to $400 million price tag. On Friday, the company held the first of a series of summer meetings with dozens of industry experts, academics, conservation groups and others focused on bringing down the cost.
The two turbines are considered an early test for the fledgling U.S. market. Dominion hopes to eventually install about 300 turbines across 112,800 acres near the test site.
“This project is very important to Dominion, but it’s very important to the offshore wind industry as a whole,” said Mary Doswell, Dominion’s senior vice president for retail and alternative energy solutions. “The results of it will help us to develop the picture of offshore wind for the U.S. in the future.”
The design for the turbines includes innovations meant to test their resilience to hurricanes and automated controls that alert the company to any needed maintenance. A new foundation design would use less steel, but that didn’t reduce the price, as Dominion expected.
Mark Mitchell, Dominion’s vice president of general construction, said those innovations are among the many factors Dominion will weigh as it tries to cut costs. But he warned that some of the state-of-the-art aspects are needed so Dominion and other utilities can get a better idea of what it will take to install large arrays of wind turbines off the East Coast.
“What you don’t want to do is cut yourself short where we don’t put the hurricane resilience piece on it because we don’t think it’s needed, then – lo and behold – we have a failure because of that,” Mitchell said.
A major reason the costs are so high is that offshore wind is new in the U.S. There’s no ship in the country that is large enough to install the turbines – which will tower 585 feet over the sea, or about the height of the Washington Monument – Mitchell said.
That means a ship will have to sail from Europe at a cost of hundreds of thousands of dollars a day to install the turbines after the foundation is planted in water 80 feet deep using a vessel from the Gulf Coast. Dominion has studied anything that could cause costly delays to the work, from whale migration patterns to hurricane probabilities, in an effort to find the best time of year to bring the ships here.
Dominion should reach out more to those in the European market and the shipping companies that could haul the turbines, suggested Andy Geissbuehler, general manager of North America operation for French turbine company Alstom Wind.
Europe had more than 2,300 offshore turbines producing more than 7,300 megawatts as of last year, with many more under construction.
“The cost reduction curve is moving farther in Europe than expected,” he said. “Another area we should look at is logistics. Should we use the same ship to install the substructure and the turbine?”
Friday’s meeting served largely as a forum for Dominion to explain the history and challenges of the project to stakeholders before splitting them into small groups for more detailed discussions later this summer. The goal is to have a set of recommendations to present to the Virginia Offshore Wind Development Authority in October.
Dominion originally planned to ask this month for the State Corporation Commission to approve the project, hoping it could begin construction in the summer of 2016 and begin operations in 2017. That timeline is likely to be delayed by a year while Dominion works to reduce the impact of the project on its ratepayers. The company has a $47 million grant from the U.S. Department of Energy to help cover some costs.
In response to questions at the meeting, Dominion officials declined to say exactly what price point they think will make the project viable and what the company will do if it can’t reach that point.
“Everybody I’ve talked to would like for this project to succeed,” said Mark Rubin, a professional facilitator from Virginia Commonwealth University and senior adviser to Sen. Timothy M. Kaine, D-Va., a former governor who is leading the discussions. “The only question is what’s the best way to get there.”
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