The Danish energy giant that is partnering with Dominion Energy on a Virginia offshore wind pilot project has finalized its $510 million acquisition of Deepwater Wind, which built the first — and for the time being the only— offshore wind farm in the U.S. in Block Island Sound.
The new entity, Ørsted US Offshore Wind, “will be able to deliver clean energy to every coastal state in the densely-populated east coast corridor between Massachusetts and Virginia,” the company said in a news release.
“We have created a world-class team, with both deep experience building large-scale offshore wind projects and intimate knowledge of the U.S. markets,” said Thomas Brostrøm, CEO of Ørsted US Offshore Wind and president of Ørsted North America. “The approval of this deal signals the importance of growing the U.S. offshore wind industry. We are moving quickly to integrate the two U.S. organizations so we can deliver large-scale clean energy projects as soon as possible. We look forward to continuing Deepwater Wind’s first-class work along the Eastern Seaboard and taking the U.S. market to the next level.”
Seven Atlantic states have committed to building more than 10 gigawatts of offshore wind capacity by 2030 and the new company “launches as the clear leader in the U.S. market, with the most comprehensive geographic coverage and the largest pipeline of development capacity, totaling over 8GW.”
Dominion’s $300 million test turbines were grudgingly approved by the State Corporation Commission last week, and critics have questioned why the utility needs to build them at all when other states are plunging ahead with full-scale developments, usually through power-purchase agreements with private developers. Dominion and Gov. Ralph Northam’s administration say the test turbines are a first-step toward an eventual 2,000 megawatts of offshore wind power built about 27 miles off the coast of Virginia Beach.
“Other utilities involved in offshore wind have done so through a power-purchase agreement model, which generally places all or some of the risk on the developer,” the State Corporation Commission noted, adding that it expected offshore wind to remain more expensive than other renewable energy options for years to come. “Customers will pay at least $300 million (plus financing costs) to demonstrate a large-scale project that, based on Dominion’s own studies, will not be a competitive option for the next 25 years.”
Ørsted, headquartered in Denmark, bills itself as the world’s leading offshore wind farm developer, with 5.1 gigawatts of offshore wind capacity installed in Europe and another 3.8 gigawatts under construction.