Virginia is all-in on offshore wind but Dominion’s decision raises questions about cost, competence
Construction of offshore wind turbines. (Ørsted)
It’s not every day that the names of a major utility and the nation’s largest grassroots environmental organization share space on a banner. But at the American Wind Energy Association’s annual offshore wind conference earlier this month in Boston, the logos of the Virginia Chapter of the Sierra Club and Dominion Energy bookended those of half a dozen state agencies, educational institutions and business development organizations on a banner proclaiming Virginia’s commitment to offshore wind.
The banner anchored a large corner booth showcasing the strengths Virginia brings to the growing industry. Broad stakeholder support is one advantage; unlike Massachusetts, Virginia has seen little opposition to its plans for developing the 112,799-acre offshore wind energy area 27 miles out from Virginia Beach.
This broad stakeholder support is the product of more than a decade of work on the part of researchers, environmental organizations, the business community and elected leaders from both parties.
For the Sierra Club and Gov. Ralph Northam’s administration, offshore wind offers carbon-free, renewable energy and a way to position the Virginia as a leader in the green economy. For the Port of Virginia and Virginia Beach Economic Development, it brings new business opportunities. For Old Dominion University and Virginia Tidewater Community College, it’s a chance to train young people and participate in ground-breaking research in ocean science and engineering. And for Dominion Energy, it offers a new avenue for profit and a way to rebrand itself as a clean energy company without having to shed its core investments in fracked gas.
Now, at last, it is poised to happen. In September, Northam signed an executive order targeting the full build-out of the federal offshore wind lease area off Virginia by 2026; two days later, Dominion Energy, which holds the lease, confirmed it plans to build 2,600 MW of offshore wind in three phases in 2024, 2025 and 2026. Once built, the 220 turbines are projected to produce enough electricity to power over 700,000 homes.
This commitment puts Virginia among the states pursuing offshore wind most aggressively. With other states rapidly increasing their own targets and signing contracts with developers, the East Coast could now see over 25,000 MW of offshore wind by 2030, with some conference speakers predicting the total will rise to 30,000 MW by the end of the decade. At the AWEA conference a year ago, that number stood at just 10,000 MW — and attendees were plenty jazzed then.
Virginia will also have the first wind turbines in federal waters when the 2-turbine Coastal Virginia Offshore Wind (CVOW) pilot project reaches completion next summer. Earlier this year CVOW became the first project permitted by the federal Bureau of Ocean Energy Management.
Massachusetts hits a snag, and sends a shiver through the industry
The second project in line, the 800-MW Vineyard Wind off Massachusetts, suffered a setback this summer when the Department of Interior decided to require an additional layer of review. Bowing to objections from the commercial fishing industry and the National Marine Fisheries Service, the department is now requiring a supplemental Environmental Impact Statement to look at the cumulative impact of many wind farms instead of limiting review to the one project.
Project developers and advocates wonder whether the move reflects a Trump administration change in attitude towards offshore wind or merely shows the federal government is still figuring out how to balance competing ocean uses. President Donald Trump is famously derisive of wind power, but BOEM Director Walter Cruikshank assured the AWEA audience that the administration remains committed to a successful offshore wind industry.
That may be, but meanwhile the delay in the project timeline is causing heartburn for industry members and anger among advocates. Jack Clarke, director of public policy & government relations at Mass Audubon, commented testily that if the National Marine Fisheries Service was really so concerned about protecting fisheries, it should have acted 40 years ago before overfishing led to the collapse of Massachusetts’ cod, haddock and flounder fisheries.
Clarke is a veteran of more than a decade’s worth of battles over offshore wind, beginning with the ill-fated Cape Wind project proposed in 2001. Cape Wind was ultimately abandoned in 2017 in the face of implacable resistance from NIMBYs — but not from Mass Audubon and other wildlife groups, which championed the wind farm as part of the solution to global warming. Now, Clarke says, it is time for the government to put its full weight behind the wind projects.
Fewer conflicts seen for Virginia
Concerns about commercial fishing seem less likely to stall offshore wind plans in Virginia, where years of public engagement helped ensure the Virginia Wind Energy Area is reasonably free of conflicts with the fishing industry, as well as shipping and military operations.
AWEA panelists also agreed that careful siting and construction practices can limit harm to wildlife. Siting wind farms 25 miles or more out to sea puts them beyond the paths of migratory birds; and according to Stuart Clough, president of environmental consulting firm APEM, European data shows birds tend to avoid wind farms altogether, or keep to shipping channels that transect them.
Yet some impacts are inevitable. Sarah Courbis, protected species & regulatory specialist at consulting firm Ecology and Environment, Inc., recommended developers follow a practice known as “adaptive management,” which involves continuous monitoring during construction and operations, with contingency plans in case problems arise.
European studies have shown that marine mammals generally adapt well to wind farms, moving out of the area during construction and returning afterwards. That is expected to hold true for the U.S., though conservation groups remain worried about interference with migrating North Atlantic right whales, a species already perilously close to extinction. Courbis said, however, that although wind farm construction affects whale behavior, the more serious threat to the species comes from entanglement in fishing gear and ship strikes, which cause most whale fatalities.
Nonetheless, Vineyard Wind committed to curtailing construction when right whales are nearby, as Deepwater Wind did when building its Block Island project in 2016. Conservation groups are pressuring other developers to take similar protective measures.
One of the more interesting features of Virginia’s CVOW pilot project is that it will test how well a double “bubble curtain” can muffle construction noise to reduce interference with marine mammals.
Questions of timing and cost
Other important questions remain for the Virginia wind farm, including whether the administration’s timeline is achievable, who will actually do the work, and — critically — what it will cost.
Completing the first 880 MW of wind turbines off Virginia by 2024 depends on many factors that aren’t entirely under the control of Dominion and state agencies: how fast a supply chain develops; whether Virginia attracts manufacturers; how quickly port facilities can be upgraded; the availability of an installation vessel capable of handling 12-MW turbines (currently there are none in the U.S.); and whether BOEM will be able to expeditiously review the many construction and operations plans it will receive from offshore wind developers up and down the East Coast over the next few years.
Then there is the question of who will build Virginia’s first commercial wind farm. Dominion contracted with the Danish wind giant Ørsted for CVOW, but it has not renewed the partnership for the commercial wind farm. However, Dominion announced last week it intends to build the Virginia wind farm itself.
That raises questions of competence and cost. Other states have proceeded with competitively-bid contracts that ensure developers are qualified and that consumers pay a fair market price for the electricity produced. The competency issue can be solved through talent acquisition, but without competition or a price guarantee, it will be a challenge for Virginia’s State Corporation Commission to ensure electricity customers don’t overpay.
I asked Stephanie McClellan, director of the special initiative on offshore wind at the University of Delaware, how the SCC could tackle the problem. McClellan pointed to two offshore wind contracts that had been signed without competitive bidding: the ill-fated Cape Wind, and the (also never built) Bluewater Wind project in Delaware.
In 2007 the Delaware Public Service Commission hired an independent consultant to analyze the factors that determine the cost of electricity from a wind farm. These include the output of the turbines (primarily a factor of turbine size and wind speed), construction cost (CAPEX), operations and maintenance costs (OPEX), and financing costs. On the basis of this analysis Bluewater Wind won an all-source RFP against coal and natural gas, though thereafter it failed to find financing.
Within a year the Great Recession and the fracking boom would combine to delay the offshore wind industry in the U.S. by nearly a decade, while the European build-out gained steam.
But meanwhile, the economic case for offshore wind has only strengthened. Costs have plunged 32% in the past year globally, and conference participants see further price drops ahead as the U.S. builds its own manufacturing and supply chain instead of importing European parts.
Could Virginia emerge a winner?
The conventional wisdom is that higher wind speeds make offshore wind more cost-effective in the Northeast than in Virginia. But members of the Virginia team think we may have offsetting advantages.
John Warren, director of Virginia’s Department of Mines, Minerals and Energy, says Virginia could see lower prices than the Northeast because of lower labor costs and the proximity of our lease area to the supply chain. He sees regional collaboration with Maryland and North Carolina as the key to a low-cost supply chain. But unlike Maryland, he told conference attendees, Virginia will not impose a local contracting requirement that might increase costs.
George Hagerman, senior project scientist at Old Dominion University, believes new, gigantic turbines like GE’s 12 MW Haliade-X promise an advantage in the Southeast because they can capture more energy at low wind speeds. The very strong winds that sometimes blow off New England would force a turbine that size to shut down for its own protection, resulting in a lower overall output.
Hagerman has also suggested that as a utility, Dominion’s financing costs will be lower than those of an independent developer, giving it an extra cost advantage.
Hagerman has led the research on the Virginia offshore wind opportunity for over a dozen years now. In 2010 he was the lead researcher for the Virginia Coastal Energy Research Consortium, whose report that year concluded a wind farm off Virginia Beach could be built cost-effectively within five to 10 years and bring economic development and thousands of jobs to the area.
The timeline has slipped, but, the Virginia stakeholders agree, the opportunity has only gotten better.
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