Will Virginia be late to the offshore wind party?
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Nearly 200 government leaders, academics, and business people packed the Virginia Offshore Wind Executive Summit in Norfolk last week to stake their claims in the launch of Virginia’s newest industry.
“The offshore wind market is exploding,” said Liz Burdock, executive director of the Business Network for Offshore Wind, in her opening remarks.
If this sounds like déjà vu all over again, you’re not wrong. Seven years ago, a similar crowd attended a similar conference in Virginia Beach, only to see the momentum wither away as it slowly became clear Virginia would not see an offshore wind farm any time soon.
Several things have changed in the intervening years.
America’s first offshore wind farm is installed and running in the waters off Rhode Island, visible proof that the technology developed for European waters works in the U.S. Dramatic price declines in Europe and the U.S have pushed the industry from a niche player to a serious competitor for investment dollars.
Congress also extended the availability of the Investment Tax Credit at the end of 2015, with a phase-out that gives developers an incentive to commence construction sooner rather than later. Since then, six states have put laws in place to support a total build-out of 10,118 megawatts of offshore wind, enough to power millions of homes.
Jim Bennett, Office of Renewable Energy program manager for the federal Bureau of Ocean Energy Management, told the Virginia Beach audience his office has issued a total of 12 active leases to date in federal waters up and down the East Coast.
The first of these projects, Vineyard Wind in Massachusetts, will come online in 2021, with several following in 2022, and the others coming in by the mid-2020s. His chart included a spot for Virginia in 2025, but the lack of a firm commitment here meant we were not included among those six states building the 10,118 megawatts.
That’s a problem. Dominion Energy won the exclusive right to develop the lease area 25 miles off Virginia Beach back in 2013, in one of the first federal lease auctions. The area could support enough wind turbines to generate 2,000 megawatts, enough to supply electricity to more than 500,000 homes.
Dominion has moved slowly to meet the minimum requirements under the lease agreement, including development of a site assessment plan, but the company has never actually committed to building a wind farm. The option does not even appear in the utility’s Integrated Resource Plan, which maps out various alternative scenarios for meeting its electric demand in Virginia over a 15-year period.
Asked about plans for a commercial wind farm, Dominion Senior Policy Director Katharine Bond said it was “too soon to have that conversation.”
For now, Dominion is only moving forward with a two-turbine demonstration project it plans to build in the ocean where the Virginia Department of Mines Minerals and Energy holds a research lease, next to the commercial project area. Originally known as the Virginia Offshore Wind Technology Assessment Project, the project was initially supposed to be operational in 2017.
Rechristened Coastal Virginia Offshore Wind, the 12-megawatt project is now slated for completion in 2020. This summer Dominion began the process for seeking approval of the project from the Virginia State Corporation Commission.
The 12 megawatts are included in Dominion’s IRP, and Bond said getting the project done “is critical to the commercial project.”
To complete CVOW, Dominion has enlisted as a partner the Danish energy giant Ørsted, which has 25 percent of the global offshore wind market share and is active in four other states besides Virginia. The partnership has given confidence to Virginia leaders and industry members that, this time, Dominion is serious. They hope a successful demonstration project will convince Dominion to commit to the full 2,000 MW build-out.
But with one project already operational in Rhode Island, and full-sized projects under development in six other states, is CVOW even needed? Why not go straight to a commercial project here as well?
Ørsted’s Fred Zalcman insisted CVOW remains relevant, calling it a “critical stepping-stone.” The project, he said, provides an opportunity to better understand the technology as well as “proof of concept” to test the permitting. Moreover, he said, it will let Virginia leverage the local supply chain and build on that.
Other speakers echoed this point. George Hagerman, the scientist whose research with the Virginia Coastal Energy Resource Consortium demonstrated the promise of offshore wind back in 2010, said the work done to date has already proven valuable. Moreover, as the first turbines to be erected in federal waters, CVOW will become a model for the BOEM process.
Yet Hagerman, as well as other speakers at Friday’s conference, agreed on the importance of ensuring CVOW leads seamlessly to a commercial project.
Gov. Ralph Northam was among those making the link. Speaking at the end of the program, Northam said CVOW “is intended to lead to the build-out of the full resource,” and expressed confidence that offshore wind would play an important role in the commonwealth’s energy supply.
“By 2030,” he promised, “30 percent or more of our power will come from renewable energy.”
But the governor didn’t say how he would persuade Dominion to move forward.
J.R. Tolbert, vice president of state policy for Advanced Energy Economy, a national association of business leaders pushing for more clean energy, suggested possibilities, including a state tax credit or a legislative proclamation to the effect that it is the “will of the legislature to build a commercial project.”
Some conference attendees worried that, without assurance the industry would have a project in Virginia, many of the jobs will go instead to states that have committed to buy power from wind farms off their coasts.
William Floyd, business manager for the international Brotherhood of Electrical Workers in Chesapeake, told me that without a similar commitment to commercial projects here, “Virginia can’t get the workforce training, can’t get the infrastructure built” for offshore wind.
Others insisted Virginia can participate in developing supply chain industries for other states, depending on how well it stacks up against other states in the competition for jobs that don’t depend on location.
“Virginia is the location of choice for business that wants to serve the growing offshore wind industry,” said DMME Director John Warren. Warren was on hand for the full conference, reflecting the importance the administration is giving to this industry.
One thing Virginia apparently shouldn’t hope for is additional help from the President Donald Trump’s administration.
Jim Bennett of BOEM said his agency’s focus has been “working to streamline the process so developers can get in under the wire” of the ITC expiration.
Many speakers noted the dramatic cost declines of offshore wind both globally and in the U.S. The technology makes sense now in northeastern states, with high electricity prices and world-class offshore wind resources. It may take further price drops for offshore wind to compete with relatively lower electricity prices in Virginia, but the trend is clearly in our favor.
Meanwhile, making the commitment would have clear economic development benefits in the form of jobs and infrastructure development. A report issued last week by BVG Associates for the Sierra Club described the economic advantages available to Virginia, and urged the commonwealth to get moving.
Or, as Jay Barkland of the Danish consulting group Ramboll put it Friday, “We did need to start thinking about infrastructure five minutes ago.”
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