Virginia’s State Corporation Commission (SCC) has approved a petition to build a 12-MW offshore wind energy demonstrator off the coast of Virginia Beach, although it expressed some reservations about it.
“We are wasting no time moving forward on our plans for clean energy investments,” said Dominion Energy Power Generation Group chief executive Paul Koonce. The company’s plans include offshore wind and solar.
The US$300M offshore wind project – the first to be constructed in a federal lease area – will be funded through existing base rates, as enabled by the Grid Transformation & Security Act of 2018. Contingent on various regulatory approvals, onshore construction would start in 2019, followed by turbine installation and operation in 2020.
The project consists of two wind turbines to be built by Dominion Energy that would begin operating in December 2020.
In its findings, the Commission determined that the company’s proposal puts “essentially all” of the risk of the project – including cost overruns, production and performance failures – on Dominion’s customers. Currently, the estimated cost of the project is at least US$300M, excluding financing costs.
The Commission found that the offshore wind project was not the result of a competitive bidding process to purchase power from third-party developers of offshore wind. Doing so would likely have put all or some of the risks on developers as has been done with other offshore wind projects along the east coast of the US. The Commission also found that any “economic benefits specific to [the project] are speculative, whereas the risks and excessive costs are definite and will be borne by Dominion’s customers.”
The Commission concluded that the offshore wind project “would not be deemed prudent [under this Commission’s] long history of utility regulation or under any common application of the term.”
However, the Commission ruled, as a matter of law, that recent amendments to Virginia laws that mandate such a project be found to be “in the public interest” make it clear that certain factual findings must be subordinated to the clear legislative intent expressed in the laws governing the petition.
Dominion Energy Virginia is working on the project with Ørsted. Dominion Energy filed an application with the SCC for approval to build the two 6-MW turbines and grid infrastructure needed to connect the facility to the coast in August 2018.