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Blowout Sale: Dominion Virginia Wins Federal Offshore Wind Auction
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September 06, 2013

Blowout Sale: Dominion Virginia Wins Federal Offshore Wind Auction

By Cheryl Kaften
TMCnet Contributor

Plans for an offshore wind farm in U.S. waters moved forward this week, as Dominion Virginia Power bid $1.6 million to provisionally win the lease for 112,800 acres of federal land off the coast of Virginia.

The Wind Energy Area secured by Dominion is located about 23.5 nautical miles off the Virginia Beach coast—beyond the sight lines of the mainland—and has the potential to support 2,000 megawatts (MW)of wind generation, or enough energy to power more than 700,000 homes.

The utility outbid Apex (News - Alert) Virginia Offshore Wind in a six-round auction held by the Interior Department’s Bureau of Energy Management (BOEM). BOEM has several milestones that Dominion must meet to keep the lease with the final milestone being the submittal of a Construction and Operations Plan within five years of signing the lease. Once BOEM has the plan, it has an undetermined amount of time to perform an environmental analysis and approve the plan.

Dominion expects the first turbine to be installed within about 10 years pending project approval by state regulators. The company will then be able to operate the wind farm for 33 years, paying annual rent of nearly $339,000 and an operating fee when it begins to produce power from the site.

BOEM map of current offshore wind projects in the Atlantic; rectangle at bottom is 112,800 acre site near coast of Virginia.

"Offshore wind has the potential to provide the largest, scalable renewable resource for Virginia if it can be achieved at reasonable cost to customers," said Mary C. Doswell, senior vice president-Alternative Energy Solutions, Dominion. "We will now proceed with the BOEM timetable for development of the commercial wind energy area; while advancing our research proposal and looking for ways to lower the cost of bringing offshore wind generation to customers."

Dominion is involved in other offshore wind research projects. Dominion and its team was one of seven projects selected to receive $4 million each in federal matching funds to undertake initial engineering, design, and permitting for a demonstration facility of two six-megawatt turbines with a goal of finding innovative ways to lower costs of offshore wind. The Department of Energy will select up to three of the projects for follow-on phases to move forward with the final design, permitting, and ultimate construction of these demonstration projects. The projects must be in operation by the end of 2017.

The BOEM also has several other projects in various stages of development in the waters off. Massachusetts, New Jersey, Delaware, Maryland, North Carolina and New York. In July, the department awarded a 165,000-acre tract 10.5 miles south of the Rhode Island coast to Deepwater Wind New England, which submitted a winning bid of $3.8 million.

With the Massachusetts plan delayed by litigation, the Maryland wind farm will, likely, be the next to go to lease auction. The state already has approved legislation sponsored by Gov. Martin O’Malley (D) to assist the eventual developer of the project with financing.

Although Apex was the only other bidder for the Virginia site, the auction was open to the following companies:Apex Virginia Offshore Wind, LLC; Virginia Electric and Power Company (“Dominion Virginia Power”); Energy Management, Inc.; EDF Renewable Development, Inc.; Fisherman’s Energy, LLC; IBERDROLA RENEWABLES, Inc.; Sea Breeze Energy, LLC; and Orisol Energy U.S., Inc.

Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 23,500 megawatts of generation, 11,000 miles of natural gas transmission, gathering and storage pipeline and 6,400 miles of electric transmission lines.  

Edited by Stefania Viscusi

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