RICHMOND — Dominion’s offshore wind plans could create a big new chunk of the local economy, even making up for Department of Defense cuts, if the project comes to fruition.
But that is a very big “if.”
The state’s electricity giant has massive decisions to make in the coming years about how it’s going to power the state in the face of new federal rules on carbon production. In many ways, its proposed wind farm off the coast of Virginia Beach is in direct competition with a contemplated new nuclear reactor in Louisa County — North Anna 3.
Both have similar price tags — an estimated $15.3 billion for a wind farm and $14.8 billion for the new reactor. The company told lawmakers last year it had already spent $600 million on the reactor.
“There is just so much capital that they can invest,” said Eileen Levandoski, assistant director of the Virginia Sierra Club. “It really is going to be one or the other.”
Dominion isn’t ready to concede that. Senior Vice President Mary Doswell said last week that none of the scenarios the company has mapped out include both projects, but that hasn’t been ruled out completely.
“They’re both big projects,” she acknowledged.
If the company goes with wind, installing as many as 300 turbines in a plot 27 miles off Virginia Beach, it would boost a fledgling wind industry just starting to root along the East Coast. It will take a combination of projects, experts said. One off Rhode Island is under construction, and there’s another proposed off the New York Coast. A project in New Jersey has run into regulatory problems and one Massachusetts effort has floundered badly.
But if mulitiple Atlantic projects can be strung together, the resulting industry would create an at least 4,400 jobs for a decade, according to a Virginia Coastal Energy Research Consortium presentation. It could mean another 4,000 indirect jobs, according to the consortium, which partners with various Virginia universities and research groups.
With the Port of Virginia and the already-in-place infrastructure of shipbuilding operations, Hampton Roads would seem to be a perfect home for the new industry. The region could become the new “Silicon Valley” of offshore wind, according to Virginia Ship Repair Association President Bill Crow.
“It might even be as big as the ship repair and building industry,” Crow said. “Enormous.”
Nothing yet
There are no operational, permanent offshore wind farms along the United States coast.
Some had hoped Virginia would host the first, but Dominion’s two-turbine pilot project was delayed earlier this year when construction bids came in at more than double the company’s estimate.
It hopes to have the project back on track in a year.
Meanwhile, construction is underway off Block Island, which sits along the Rhode Island coast. The island’s already high cost of electricity production made the expensive project there an easier sell. Electricity in Virginia is some of the cheapest on the East Coast, fired almost completely by a mix of nuclear power, coal and natural gas.
Dominion said it expected to spend about $230 million to build two six-megawatt turbines off the coast here. The company said it got just one complete bid from the industry, though, that was closer to $400 million.
Doswell said Dominion went back to the contractor and asked for an adjustment, but the two sides were too far apart for talks to go far. She would not name that contractor, or the project’s only other bidder, whose proposal was considered incomplete.
Now a group of stakeholders, including the Sierra Club and representatives from the wind industry, are gathering with Dominion executives and a facilitator to cut costs and get the pilot project back on track.
Some question whether it will truly cost as much as Dominion says, and whether the company is committed to offshore wind at all.
Aviv Goldsmith, the managing director of development for offshore wind developer Fishermen’s Energy, said he thinks the $230 million figure is probably close to the actual construction costs. His company is involved in the New Jersey project, and he said Dominion’s bid specifications required bidders to take on too much risk, jacking up the cost.
“(Dominion) can’t disavow themselves from risk if they want the project to go forward,” he said.
Levandoski, the Sierra Club’s representative to Dominion’s ongoing stakeholder process, said she and other environmentalists “have long been suspicious” of Dominion’s willingness to move forward. Among other things, the Sierra Club disputes Dominion’s contention – made in a recent filing with state regulators – that the wind farm would be the most expensive way to meet new federal carbon rules.
A new nuclear reactor would likely be more expensive, according to the group, which bases its analysis in large part on testimony from an energy expert hired by the Virginia Attorney General’s Office to analyze Dominion’s plans.
Doswell said the company is absolutely serious about wind. It holds a federal lease for ocean bottom land and spends more than $338,000 a year to keep that lease up, according to company figures.
The company has spent about $24.5 million on the project so far, but at least $10.2 million of that came from a federal energy grant. The project is qualified for more than $50 million in federal grants, but the company must hit various targets to draw down all of that money.
There are also federal requirements for the company to hold its lease.
“We’re spending money,” Doswell said. “Why would we do that if we weren’t serious?”
Virginia advantages
The wind blows strong off the coast of Virginia, and the area has a number of other advantages when it comes to offshore generation, experts said.
The water is relatively shallow to 40 miles out, making turbine foundations easier to build. There are major population and commercial centers nearby, meaning the electricity doesn’t have to travel far to be used. The grid in place can handle the new juice, Doswell said, and the Department of Defense’s call for more green energy makes for natural customers in Hampton Roads.
“Is it viable for Virginia? Absolutely,” said Stephanie McClellan, director of the Special Initiative on Offshore Wind, an independent think tank.
But wind energy is not, in energy industry lingo, “dispatchable.” That means it cannot be depended upon 24-hours a day, like a natural gas plant, for example. The “nameplate” capacity for Dominion’s ultimate plans off the Virginia coast tops 2,000 megawatts, theoretically enough to run 500,000 homes.
The actual expected average production is about 40 percent of that, largely because of variable wind speeds, the company said.
The wind here is also more fickle, directionally speaking, than the North Sea winds driving industry growth in Europe, Doswell said. In its pilot project, Dominion wants to study a new foundation design, different from the European model, and how to tilt the blades as the wind shifts, particularly in storms.
That drives up the cost, Doswell said.
Another factor in the project’s favor: accessibility. The turbines involved are big enough that many have helicopter landing pads. The ones Dominion plans to use cannot be moved over land, Doswell said.
If the demand grows, and European know-how can be imported and replicated, Hampton Roads could not only be a staging point for farm projects up and down the coast, it could build the ships needed to build and maintain these farms, Repair Association President Crow said.
Bringing specialized ships from Europe is a major expense.
There is a chicken-and-egg problem, though. Low demand here means high costs. High costs make it difficult to promise the multiple projects it takes to make this a mainstream industry in the United States.
“(We need) a pipeline of projects … that these companies can see,” McClellan said. “(Then) I think we’re going to see them come in droves with competitive pricing.”
That remains the big if. Huntington Ingalls Industries, which operates Newport News Shipbuilding, declined to comment for this article, even though the company is participating in Dominion’s stakeholder process.
A company spokeswoman dubbed questions about wind’s potential economic impact “too speculative” to discuss.
Fain can be reached by phone at 757-525-1759.
