USA: Dominion Virginia Interested in Offshore Wind Leases

Dominion Virginia Power told the federal government yesterday that it is interested in obtaining leases off the Virginia coast in an area that has the potential to generate approximately 1,500-2,000 megawatts of electricity from offshore wind turbines. The exact capacity would be dependent on detailed site investigations.

Dominion expressed its interest in the entire 113,000 acres the government is making available approximately 24 miles off the Virginia coast in its response to the Bureau of Ocean Energy Management (BOEM)’s Call for Information and Nominations that was issued Feb. 3.

 “Offshore wind generation holds great promise in the long term as a scalable source of emissions-free renewable electricity,” said Mary C. Doswell, executive vice president-Alternative Energy Solutions. “Virginia is well positioned to accommodate offshore wind with the existing electric grid and world-class port facilities in Hampton Roads. The challenge remains the high cost of building this generation and bringing it to customers.”

The U.S. Energy Information Administration projects the cost of offshore wind generation in 2016 at approximately 24 cents per kilowatt-hour generated. This is a significant premium over the 7.3 cents per kilowatt-hour that comprise the generation portion of Dominion Virginia Power’s residential rate today of about 10.9 cents per kilowatt-hour.

The company has received a two-year, $500,000 grant from the U.S. Department of Energy with a goal to find innovative ways to reduce the cost of offshore wind generation by 25 percent.

As with any utility generating project, the Virginia State Corporation Commission would have to approve any Dominion Virginia Power offshore wind power generation project.

If awarded a lease, Dominion said it would conduct detailed site assessment activities, including the erection of a meteorological tower to study wind strength and patterns.

The leasing area is divided into 19 whole blocks, each 3-by-3 miles, and 13 partial ones. Because navigational and environmental studies may further limit suitable areas for development, Dominion nominated all of the lease blocks so it would be positioned to propose a project with beneficial economies of scale.

BOEM said responses to its call for information could lead to initiation of a competitive bidding process for tracts where more than one expression of interest is received or a noncompetitive process if there is not more than one.

Dominion Virginia Power, the largest subsidiary of Dominion and the state’s largest electric utility, has been involved in offshore wind studies since 2010. It has completed two electric transmission studies related to offshore wind generation. One found that Virginia has an advantage compared to many states because it has the capability to interconnect large scale wind generation facilities with the existing grid in Virginia Beach, and the other found cost savings were possible by building the wind facility in phases with a potential for standardization of offshore transmission infrastructure.

Dominion is one of the nation’s largest producers and transporters of energy, with a portfolio of approximately 28,000 megawatts of generation, 11,000 miles of natural gas transmission, gathering and storage pipeline and 6,300 miles of electric transmission lines. Dominion operates the nation’s largest natural gas storage system with 947 billion cubic feet of storage capacity and serves retail energy customers in 15 states.

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Offshore WIND staff, March 20, 2012; Image: boem