NORFOLK – Dominion Energy Virginia is about to map uncharted waters with a $300 million project to research the use of wind power off Virginia’s Atlantic coast to generate electricity for millions of homes and businesses in the state.
The utility filed a request with regulators at the State Corporation Commission on Friday to find the 12-megawatt research facility to be a “reasonable and prudent” investment of regulated utility rates that could lead to a major investment in commercial offshore wind power in less than a decade.
“This is an important first step we know will lead us on a much longer journey,” Dominion CEO Thomas F. Farrell II said in a ceremony at the Nauticus museum Friday.
Dominion proposes to pay for the project through base rates, although it could use “customer credits” under a new state law – the Grid Transformation and Security Act – that allows the state’s two biggest electric utilities to reinvest excess earnings in renewable energy development instead of refunding the money to ratepayers.
“It will not increase customer rates even a penny,” Farrell said before the ceremony.
Gov. Ralph Northam joined the Dominion executive before the ceremony to tour a high-tech vessel that will map the ocean floor at the wind turbine site in federal waters 27 miles off the coast, as well as the route of the underwater cable that will connect the facility to the utility transmission network.
“Offshore wind is a tremendous victory for Virginia,” Northam said.
The governor praised Dominion for its pledge to have 3,000 megawatts of electricity from renewable energy – enough to power 750,000 homes – built or under development by the time he leaves office in 2022.
The new law, signed by the governor in March, declares it to be in the public interest for Dominion to develop up to 5,000 megawatts of electricity from wind, solar and other renewable energy sources in the next 10 years.
“My hope is these will be the first of many turbines that will be located off our coast in years to come,” Northam told the audience next to the Nauticus dock on the Elizabeth River.
The two 6-megawatt turbines would stand in 80-foot-deep water and rise 550 feet above the surface, but remain invisible to people standing on the beach 27 miles west, the company said. They would generate electricity for Dominion customers through a series of 34.5-kilovolt cables extending through federal and state waters to a new substation at Camp Pendleton in Virginia Beach.
The project will be designed and built by Ørsted, a Danish energy company that already has developed 24 offshore wind projects around the world that generate 5.1 gigawatts of electricity, enough to serve more than 2 million homes in the United States.
“We are very excited to help the commonwealth reap the benefits of wind power,” Ørsted North America President Thomas Brostrøm said.
The research facility would be the second offshore wind power site along the Atlantic coast and the first to be owned by a public utility. The other, off the coast of Rhode Island, is an independent power producer.
The project has been seven years in the making, beginning with a federal grant in 2011 for Dominion to study the potential of offshore wind power. Two years later, Dominion won a federal bid for a 112,000-acre site in the Virginia Wind Energy Area, next to the federal research lease area, where it ultimately could generate up to 2,000 megawatts of electricity.
The demonstration could lead to a larger commercial offshore wind proposal as early as 2024 – “if economic” – the company said in testimony to the SCC.
“Dominion Energy Virginia understands that any time we make a proposal of this magnitude, customers and the commission are concerned,” said Mark Mitchell, president of generation construction for Dominion Energy Services.
“The General Assembly, however, has made a determination that planning and development activities associated with offshore wind facilities are in the public interest for a host of reasons reflected in the Commonwealth’s Energy Policy,” Mitchell concluded in testimony filed at the SCC on Friday.
The SCC has three months under the law to act on the proposal. Dominion said it plans to begin construction by Dec. 1 and work on the electrical interconnections next year, followed by construction of the pilings and installation of the turbines in mid-2020.
Dominion said it expects to begin commercial operation in December 2020.
The research project is notable less for the electricity it would generate than the knowledge it would bring as Dominion and federal and state energy officials look to develop much larger offshore power generation in adjacent federal waters available for commercial lease and development.
“The offshore wind demonstration project will provide critical information to stakeholders and will position Virginia as a leader as we work to attract job opportunities in the offshore wind supply chain and service industries,” Northam said in Friday’s announcement.
Dominion acknowledged the challenge of developing offshore wind projects that make economic sense for the company and its customers.
“Although the company is not asking for approval of a utility-scale offshore wind development through this petition, beginning with a 12-[megawatt] demonstration project … is a necessary and prudent step forward,” Mitchell said in his testimony.
Dominion said it has significantly reduced the cost and risk of offshore wind development after a series of requests for proposals that it deemed too expensive. The company contracted last year with Ørsted after refining the project’s scope and commercial approach.
“They know what they’re doing,” Farrell said in an interview.
The company said the knowledge gained by the proposed research project would help Virginia meet its demand for electricity while reducing emissions of carbon dioxide and other greenhouse gases from the combustion of traditional fossil fuels, such as coal, oil and natural gas.
“While the [demonstration] project by itself will not provide large carbon benefits due to its size, the potential for future offshore wind would,” said Mitchell, who added that offshore wind projects could help the company “comply with Virginia’s future carbon regulations.”
He acknowledged that the research project currently “may not compare favorably” with other sources of electricity, such as solar, onshore wind and purchases from the wholesale power market.
But Mitchell said: “The real value of the [demonstration] project is the data we will gather when it is operational.”
Northam agreed in an interview after the ceremony. “This is research and development,” he said.
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